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Friday, July 24, 2015

Guarding Against Identity Theft: Take steps so criminals can't take vital information from you

At the current time, one in 14 Americans aged 16 or older have been a victim of identity theft in the past 12 months.  That equates to more than 16.6 million people – a sobering statistic.  While 86% of victims cleared up the resulting credit and financial problems in less than one day, 10% of victims had to struggle with the issues for a month or more.

Tax time is a prime time for identity thieves.  They would love to get their hands on your return and to claim a phony refund using your personal information.  E-filing of tax returns is becoming increasingly popular – just make sure you use a secure Internet connection.  When you e-file, you aren’t putting your Social Security number, address and income information through the mail.  If you can’t bring yourself to e-file, then consider sending your returns via Certified Mail.  And, make sure to put the rough drafts of your returns through a shredder.

The IRS does not use unsolicited emails to request information from taxpayers.  If you get an email claiming to be from the IRS asking for your personal or financial information, report it to your email provider as spam.

Another precaution to take is to be very careful using Wi-Fi networks. Don’t risk disclosing financial information over a public Wi-Fi network. A favorite hacker trick is to sit at a coffee house, library or airport and set up a Wi-Fi hotspot with a name similar to the legitimate one.  Inevitably, people will fall for the ruse and log on and get hacked.

Look for the “https” when you visit a website.  When you see the “s” at the start of the website address, you know the site has active SSL encryption.    A padlock icon in the address bar confirms an active SSL connection.  You can also opt for a virtual private network (VPN) service which encrypts 100% of your browsing traffic but it could cost you around $10 a month.

Make sure you check your credit report on a regular basis.  You are entitled to one free credit report per year from each of the big three agencies.  Another tip is to choose passwords that are really esoteric and preferably with number as well as letters to make them tougher to hack.

A final bit of information is to be careful talking to strangers.  If you get a call or email from someone you don’t recognize telling you you’ve won a prize, and claiming to be from the county clerk’s office, a pension fund or a public utility – be skeptical.  You could be doing yourself a big favor!

Posted by: David Shober at 9:59 AM
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Friday, July 24, 2015

Don't Waste Your U.S. Savings Bonds

A common mistake among Savings Bond holders is holding on too long.  Sometimes they forget or don’t know that they have maturity dates.  When a bond stops earning interest it is said to have matured and is time to cash it in.  The problem most people run into is forgetting about the maturity date or not knowing when it is.  This can cause problems when taxes are due and the Internal Revenue Service can penalize you for it.

The interest your bond accumulates must be reported on your 1040 form when the bond is either redeemed or reached full maturity.  Failing to do so will allow the IRS to issue a federal tax penalty taking away from the value of your bond. 

Paying the tax on your Savings Bond can be done two ways.  Deferring the tax until maturity allows the holder to wait until they redeem it before reporting the interest through a 1099-INT form.  Paying the tax annually before redeeming can be reported as taxable interest each year and is a good way to stay on top of your payments and stay aware of the maturity date.

If you forgot to redeem the bond on or before the maturity date the federal tax return for the year of maturity must be amended.  This can be done through a Form 1040X and must be done immediately.  The longer you wait to amend the greater chance of being penalized and possibly a higher amount owed.

Beware of electronic bonds as well.  It is easier to forget about these and their maturity dates can sneak up on you.  Keeping track of maturity dates, yields and interest rates on your bonds can help in the redeeming process and bonds that are ten years old can have a value of 3-9 times that of the original face value.  These earnings can be extremely useful and can help you from withdrawing from other retirement accounts.  Don’t overlook your U.S. Savings Bonds and remember to check those maturity dates.

Posted by: Patrick Carroll at 9:54 AM
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