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2020 Newsletter
Volume 14, Issue 2
Tax Tips From The IRS

Even with the best intentions, filing taxes often becomes an event that is put off until the very last minute. For those who are not accountants, tax laws can be confusing, leaving many unsure of what they may deduct and how they should file. However, according to the Internal Revenue Service (IRS)¹, the process can be simpler than you may think. Here are ten tax tips direct from the IRS designed to make your filing easier than ever:

  1. Organize. Take time throughout the year to store and organize your records and receipts in one place. Remember to include the income, deduction, or tax credit items that you reported the previous year. Organizing and maintaining a filing system will keep everything in one place, and make filling out forms that much simpler.

  2. Avoid Procrastination. Procrastination is often tempting. However, doing your taxes sooner rather than later will allow you extra time to sort out potential problems or questions that might arise. Also, with time on your side, you will be more likely to avoid mistakes, as well as have the opportunity to discover all applicable tax savings.

  3. Look up the IRS Online. At www.irs.gov, you will discover many sources of information. You will be able to download and print tax forms, access tax law information, and find a list of answers to frequently asked questions.

  4. Get Tax Assistance for FREE. Individuals needing assistance can call the IRS tax help line at 800-829-4477. Recorded messages cover approximately 150 tax topics. Also, libraries and post offices can often provide both the needed tax forms and instructions.

  5. More FREE Tax Assistance. The IRS provides Volunteer In-come Tax Assistance and Tax Counseling for the Elderly at locations across the country. To find a volunteer location near you, call 800-829-1040. This number can also provide the dates and hours of available service.

  6. E-file. E-filing presents an easy and convenient method of filing your taxes. Errors are reduced and refunds are returned in half the time as compared to those who mail their documents. At www.irs.gov, you will find an e-file link, which will take you to companies that provide this service.

  7. Double-check. When you have finished with your forms, take a couple of extra minutes to double-check your information, especially your Social Security number. Also check your spelling and math. If your forms are hand-written, make sure they are legible.

  8. Use Direct Deposit. If you are to receive a refund, the direct deposit option will allow for a faster return, and it may decrease chances of theft. When you enter information for this option, take the time to double-check your bank account number to avoid errors.

  9. Stay Calm. If you owe the IRS money but can’t afford to pay, stay calm. Options for paying with a credit card—or even in monthly installments—do exist. Filing your return on time, or requesting an extension on time,can save you from possible late filing fees. For more information, go to www.officialpayments.com or www.pay1040.com.

  10. Apply for an Extension. If your time is up and your forms aren’t ready, you can request an extension deadline of August 15.Call 888-796-1074 or e-file Form 4868 to make this request. If you owe money on your taxes, you will still be subject to payment due on April 15. Failure to do so may subject you to late charges with interest.

These easy-to-follow steps will help to prevent any unnecessary tax apprehension, and they can help to make the process that much smoother. Starting early and organizing throughout the year will greatly reduce chances of error and stress. Who knows? Your next tax return may just be the easiest yet! ¹IRS. “IRS Suggests Ten Ways to Avoid Problems at Tax Time.”

http://www.irs.gov/newsroom/article/0,,id=108507,00.htm(accessed September, 2006).

How to Avoid Identity Theft

Identity theft is one of the fastest growing crimes in the United States, with as many as 750,000 Americans becoming victims every year, according to government estimates. Identity theft is a type of fraud in which the thief uses your personal information to conduct transactions in your name. Criminals may, for example, appropriate your identifying details to open or empty bank accounts, obtain credit cards, or take out loans.

Thieves can sometimes access your confidential financial details when companies that hold your information, such as your bank and credit card providers, lose customer data or have their systems raided by hackers. There are, however, several steps you can take to reduce the risk of having your personal details stolen and misused, as well as a number of ways to detect a theft early and minimize the damage done to your credit score.

  • Monitor your credit reports, checking regularly for any suspicious transactions. Each of the three major credit rating agencies, Experience, Equifax, and TransUnion, are obligated to provide consumers with a free annual credit report upon request. You can access the reports through a web site co-sponsored by the agencies, www.annualcreditreport.com. A thorough review of these reports, also known as credit file disclosures, should alert you to any unusual activity. While you can order all three disclosures at once, requesting one report at four-month intervals is a more effective way to monitor your score. You are entitled to receive free reports more than once a year if you are unemployed or have been denied credit, insurance, or employment because of your credit score.

  • Do not provide sensitive data in response to e-mail or telephone solicitations. If you are interested in an offer, take down the caller’s contact information and verify that the company is legitimate before revealing your personal details. You can bar telemarketers from calling you by registering your phone number with the Do Not Call Registry at www.donotcall.gov.

  • Filter out unwanted e-mail by installing anti-spam software on your computer. To protect your home computer from intruders, install firewall and antivirus software programs that include automatic updates. Use a secure browser when conducting online transactions.

  • Invest in a mailbox with a lock or rent a P.O. box. Criminals have been known to intercept confidential correspondence and offers from financial services companies.You may also want to store sensitive information in a secure place in your home if you have reason to believe it could be used inappropriately by visitors, family members, or people working in your house.img2

  • Destroy records containing private financial information by tearing or shredding, and do not dispose of credit card receipts or ATM statements in public trash receptacles. Thieves have been known to “dumpster dive” to obtain the details they need to commit fraud.

  • Protect your accounts with passwords or access numbers that cannot be easily deduced. Avoid using your Social Security number, your birth date, your phone number, your mother’s maiden name, your children’s names, or a series of consecutive numbers. Never carry your Social Security number or passwords with you.

  • Before disclosing identifying information to businesses, employers, or other institutions, ask how the information will be stored and handled.

  • If your license or another form of personal identification is stolen, contact the appropriate agency immediately to cancel the document and order a new one.

  • Keep close track of your credit and ATM cards. Check your credit card and bank statements carefully for any suspicious purchases or withdrawals.

If you have reason to believe your identity has been stolen and misused,you should report the theft immediately to the fraud department of one of the three major credit bureaus, asking them to place a “fraud alert” on your file. The alert will prompt creditors to call you before allowing a new account to be opened in your name or an existing account to be altered. Calling just one bureau is sufficient, as the company you contact will report the problem to the other two bureaus. After placing the fraud alert on your file, you will be entitled to request free credit score reports, even if you have already asked for the reports earlier in the year.

You should also immediately contact creditors or other companies with accounts in your name that may have been opened or changed fraudulently, instructing them to close the accounts immediately. The next step is to file a report of the theft with the police in the community where the crime was committed. Finally, file a complaint with the Federal Trade Commission (FTC), which maintains a database used by police and other law enforcement authorities for identity theft investigations. Be sure to keep written records of your efforts to alert creditors and the appropriate authorities to the theft.

The “Value” of Increased Buying Power

“Hard money" and "plastic money" carry very different meanings. Hard money (i.e., actual dollars in your wallet or checking account) tends to be perceived as finite—when you run out of dollars, you've exhausted your buying power until you obtain more dollars. On the other hand, plastic money, such as credit cards, can expand your buying power up to the credit limit of the account. When buying by credit card, it appears that people are often less quality conscious in their buying behavior, may not negotiate as skillfully, and may pay more than when making an identical purchase by cash.

img1Buying on credit can be a great convenience, and it can make sense when we are temporarily short of cash. However, when buying on credit becomes our standard way of doing business, it can have some highly undesirable consequences. One way to guard against credit card abuse is to ask yourself two questions when making a credit card purchase: First, would you still purchase the item if you were paying cash? Second, would you pay the same price if paying by cash?

By keeping the focus on value, you can better distinguish between things you would like to get and things you absolutely must have. Making this distinction can help you avoid the major pitfalls of buying on credit—overpaying on individual items and spending beyond your means.

Why Should I Draft A Will?

Often, the prospect of writing a will brings up feelings of discomfort. And yet, devising a will is one of the most important factors in estate planning, one that should pro-mote feelings of security. Doing so means that heirs will be provided for and your distribution wishes will be met. Like many people, have you postponed the task of writing a will?Or, is it time to review a will drafted years ago? A will is a formal, legal document instructing your survivors in the settlement of your estate. A qualified, experienced, legal professional can help ensure your will is properly written and contributes to the overall success of your estate plan.

Composing a will helps to ensure that you control how your estate is divided. An estate that is not covered by a will (also known as an intestate estate) will bring into effect your state’s intestacy rules. These rules govern how your estate will be divided and by whom. Some people may believe their estate is too minor to need a will, but even if you believe this is the case, you should consider writing one anyway. The reason is simple: If you die without a will, you automatically forfeit the chance to direct the dealings of your estate. In addition to facilitating bequests, a will is an opportunity for you to designate your own executor, guardians for minor children, and other fiduciaries.

If you have decided that you would like your estate to pass to personal friends or charity, a will is the primary means of fulfilling these wishes. Without a will, the courts will have no way of knowing your preferences and will seek relatives—however distant—for distribution purposes. For those who have life partners and are not married, wills are a means of helping to ensure that these loved ones will be included. In addition, a will offers the opportunity to designate a secondary beneficiary in the event of the primary beneficiary’s death.

Even those who have shifted the majority of their assets into trusts or who use joint ownership should draw up a will. While these methods are designed to bypass probate (the judicial process that establishes the validity of a will), they are not able to cover all assets. A will, however, does have the potential to cover all assets, leaving no property unaccounted for and no stone unturned.

Wills are a means of providing security to you and your loved ones. The topic may be emotionally challenging, but when the many advantages are considered, they far outweigh temporary discomfort. Careful estate planning is the best way to identify how your assets will be divided, who is to be named executor, and who will receive benefits according to your wishes. Consult a legal professional for specific guidance.


The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Entities or persons distributing this information are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

The information contained in this newsletter is for general use and it is not intended to cover all aspects of a particular matter. While we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. Therefore, information should be relied upon only when coordinated with professional tax and financial advice. The publisher is not engaged in rendering legal, accounting, or financial advice. Neither the information presented nor any opinion expressed constitutes a representation by us or a solicitation of the purchase or sale of any securities. This newsletter is published by Liberty Publishing, Inc., Beverly, MA, COPYRIGHT 2008.

 

 

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