Holiday Shopping Survival Guide

GiftThe two biggest shopping days of the year are just around the corner. Black Friday, on Nov. 24, is the day after Thanksgiving when brick-and-mortar retailers entice shoppers with special deals. And online retailers provide a second round of shopping madness on Nov. 27, Cyber Monday. As you start to get bombarded with ads and emails, here are ideas to help make the most of these shopping-day phenomena.

 

Bullet Point Create a list before you shop. This can help eliminate unnecessary and impulsive purchases in-store or online. Consider breaking your list out into categories, like:

  • Necessary purchases
  • Gifts
  • Nice-to-have purchases
Bullet Point Create a budget and stick to it. If you take time before you shop to see what deals are available, you’ll be less likely to go over budget with your spending. After you make your budget, stick to it.
Bullet Point Start looking at ads as early as possible. Give yourself plenty of time to peruse and compare ads. Remember stores are competing against one another for business. This means there could be similar sales and deals at multiple places, including online. Once you find the best ads, you can create a targeted shopping plan.
Bullet Point Find the best way to make your purchases. Check both in-store Black Friday sales and online sales for Cyber Monday. Figure out the best way to make your purchases, even if that means venturing out on Black Friday for half of the things you need and taking advantage of online deals on Cyber Monday.
Bullet Point Make sure the deal is worth it. Do your homework. This means you should check the price history, verify the make and model of products (especially for electronics), and read reviews. Make sure there’s an actual discount, not just an increased price with a coupon attached.
Bullet Point Validate with social media. Use social platforms like Facebook, Twitter and Instagram to see what other people are talking about. You may even be able to find hidden coupons or learn about little-known deals.
Bullet Point Double-check the return policy. One way to avoid buyer’s remorse is to know the return policy for in-store and online purchases. Every business has a unique return policy, which can change for Black Friday and Cyber Monday deals. Moral of the story: know the return policy, no matter how big or small the purchase.
Bullet Point Don’t stress out. Try not to let excitement turn into stress and anxiety. It is easy to make a bad purchase decision caused by the chaos these annual sales events create. Remember you’ll always have more options, no matter what happens this year on Black Friday or Cyber Monday. Most businesses have seasonal holiday sales in stores and online, so there’s plenty of time left for holiday shopping.

The Equifax Breach and You

Security

 Be Proactive

Earlier this year, hackers were able to breach the security of Equifax, one of the three national credit reporting agencies. More than 143 million Americans — nearly half the country — were exposed to the attack, and may have had their personal information stolen, including names, birthdates, and Social Security and driver’s license numbers.
Equifax is still determining exactly whose data has been exposed. While you wait to find out, it’s worth taking a few proactive steps to make sure your info isn’t misused by hackers.
Bullet Point Start checking. Visit Equifax’s website at www.equifaxsecurity2017.com and enter your last name and last six digits of your Social Security number. The site will tell you whether it’s likely or not your data has been exposed, and put you on a list to get more information. You can also sign up for a year’s worth of free credit monitoring.
Bullet Point Watch your statements. Start checking your credit card statements, and pay special attention to cards you don’t use often. The initial reports from the breach were that hackers may have been making charges on underused cards.
Bullet Point Check your credit reports. You can look for suspicious items on your reports, such as new accounts being opened in your name, at all three credit report agencies: Equifax, Experian and TransUnion. Free annual reports are available at www.annualcreditreport.com.
Bullet Point Freeze your credit. If you suspect you may become a victim of identity theft, you can place a credit freeze on your profile at each of the three credit reporting agencies. This stops new accounts from being opened in your name. Note that you’ll have to unfreeze your accounts if you want to apply for new loans or make your credit accessible for things such as job applications.
Bullet Point File your taxes early. One of the most common ways identity thieves use your information is to try to claim a tax refund with your data. This was the most common scam in 2016, according to the Better Business Bureau. If you file your tax return as early as possible, you shut down this opportunity for any would-be thieves.

Renew Your ITIN Now

Home office deductions

If you have an Individual Taxpayer Identification Number (ITIN) rather than a Social Security number (SSN), you may need to take action now or you’ll be unable to file a tax return for 2017.

Here is what you need to know.

What to know about ITINs

ITINs are identification numbers issued by the U.S. government for individuals who do not qualify to receive a SSN. An ITIN can be used to file tax returns and is also a form of identification often required by banks, insurance companies and other institutions. Unfortunately, ITINs are also a source of identity fraud. To combat this, the 2015 PATH Act made substantial changes to the program. Now a number of ITINs will expire if not renewed by Dec. 31.

Bullet Point No ITIN, no problem. If you do not have an ITIN, but have a SSN, this expiration does not affect you.
Bullet Point No tax return in past three years. ITINs that have not been used to file a tax return at least once in the past three years will automatically expire on Dec. 31.
Bullet Point Specific middle digit numbers expire. The new law creates a rolling expiration date for all issued ITINs. The key number to look for is in this position: 9xx-XX-xxxx. If it’s a 70, 71, 72, or 80, you’ll need to renew it. Last year the middle digits of 78 and 79 expired.

Renew your ITIN

Don’t wait until the last minute to discover your tax return has been rejected and your refund delayed because of an expired ITIN. To renew, fill out Form W-7 with the required support documents. To learn more, visit the ITIN information page on the IRS website, Individual Taxpayer Identification Number.

Avoid FAFSA mistakes

Don’t forgo federal student aid by making one of the following common filing mistakes:

Bullet Point Mistake: Not reading the instructions or questions

Tip: Answer all the questions, even if the answer is zero. If left blank, a question will be considered unanswered. Here are some quick tips:

  • Write dollar amounts without cents.
  • “You” and “your” refer to the student, not the parents.
  • Provide parent information if you or your child is considered a dependent of someone else.
  • Understand the definitions of key FAFSA language including: legal guardianship, parent and household size.
  • Use the available FAQs and FAFSA Information Center.
Bullet Point Mistake: Incorrect, incomplete or nonmatching data

Tip: Complete the FAFSA online. Although you can complete the FAFSA on paper, it takes only three to five days to process when submitted electronically. The online version has built-in safeguards that identify and prevent many errors. Plus, the IRS Data Retrieval Tool can import information directly from your tax return. Logging in with a Federal Student Aid (FSA) ID will automatically load basic information (e.g., name, birthdate, and Social Security number), reducing the likelihood of typos. You’ll even receive confirmation of receipt once you submit your online application.

Bullet Point Mistake: Not filing on time

Tip: Note the new October FAFSA filing start date and get the application submitted as soon as possible. The sooner you or your child gets started, the higher the likelihood of being awarded funds, since many are distributed on a first-come, first-served basis.

Remember, students need to complete a FAFSA each year because eligibility does not carry over and can vary based on circumstances. Students can use the FAFSA Web Worksheet now to gather and organize the data needed for their application, available at www.fafsa.gov.

Say Goodbye to the College Tuition Deduction

Mortarboard and money

It’s hard enough to watch your child leave for college. Now you also have to say goodbye to the tuition and fees tax deduction. Congress decided not to extend this $4,000 deduction for 2017, leaving many parents worried that college will now be more expensive.

But it isn’t as bad as it sounds. That’s because Congress left in place two popular education credits that often offer a more valuable tax break:

Bullet Point The AOTC. The American Opportunity Tax Credit (AOTC) is a credit of up to $2,500 per student per year for qualified undergraduate tuition, fees and course materials. The deduction phases out at higher income levels, and is eliminated altogether for married couples with a modified adjusted gross income of $180,000 ($90,000 for singles).
Bullet Point Lifetime Learning Credit. The Lifetime Learning Credit provides an annual credit of 20 percent on the first $10,000 of tuition and fees, for either undergraduate or graduate level classes. There is no lifetime limit on the credit, but only couples making less than $132,000 per year (or singles making $66,000) qualify. Unlike the AOTC, this deduction is per tax return, not per student.

So who is affected by the loss of the tuition and fees deduction? If you are paying for your student’s graduate-level courses and are making too much to qualify for the Lifetime Learning Credit, the tuition and fees deduction was generally the only means you had to reduce your tax bill.

But there’s still hope! In addition to the two alternative education credits, there are many other tax benefits that reduce the cost of education. There are breaks for employer-provided tuition assistance, deductions for student loan interest, tax-beneficial college savings options, and many other tax-planning alternatives. Please call if you’d like an overview of the alternatives available to you.

Overtime Rules Go Into Overtime

Time Clock

The fate of a Labor Department rule extending mandatory overtime pay to workers by doubling the eligible salary cap is uncertain under the new presidential administration.

The rule introduced by the Labor Department under the direction of former President Barack Obama increases the salary cap for workers eligible to receive mandatory overtime to $47,476. It extends mandatory overtime, or time-and-a-half pay, to workers primarily in managerial or administrative roles in the retail, restaurant, and nonprofit industries.

Opponents of the rule won a court injunction blocking it in November 2016. The case may be abandoned altogether depending on the priorities set by President Donald Trump’s appointee to lead the Labor Department. Andrew Puzder, chief executive of fast food corporation CKE Restaurants Holdings Inc. (owner of Hardee’s and Carl’s Jr.) is undergoing Senate confirmation for the role. Until the case is resolved, the previous salary cap of $23,660 remains in place.

 

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Reminder: It is Tax Scam Season Too

hidden person

Imagine you receive a call from an IRS agent who says you owe back taxes and threatens to arrest you if you don’t immediately make a payment over the phone.

Thousands of Americans faced this situation in 2016, though the people on the other end of their phone lines weren’t actually from the IRS. They were scam artists calling across the world from Mumbai, India. Their aggressive intimidation of U.S. taxpayers brought in $150,000 a day until police cracked down on their call center.

Amazingly, con artists impersonating IRS agents were involved in a quarter of all the consumer fraud incidents reported to the Better Business Bureau last year, making it by far the most common financial scam. With the new tax-filing season underway, now is the time to be especially vigilant.

Top scams of 2016 graphic

The threatening approach used in Mumbai is just one variety of IRS scam. Another involved sending emails from fake IRS addresses telling taxpayers that due to a mistake they were owed larger refunds. According to the email, all they had to do was provide their bank information and prepay the tax due on the larger refund. Once they made the prepayment, both the scammer and their supposed refund disappeared.

See through any IRS scam

By following a few guidelines you can see through any IRS scam:

Bullet Point Digital communication is a big no. The IRS will never initiate contact with you via email, text message or social media, nor will they request personal or financial information over those channels. If you do get an email communication purporting to be from the IRS don’t click on any links or open any attachments. Instead, forward the email to phishing@irs.gov.
Bullet Point Mail first. The first contact from the real IRS will be through the mail. If you get a letter from the IRS that is unexpected or suspicious, it should have a form or notice number searchable on the IRS website, www.irs.gov. Compare what you find there with what you received. If it doesn’t look right, you can call the IRS help desk at 1-800-829-1040 to question it.
Bullet Point  Never pay by phone. A legitimate IRS agent will never make a call to demand immediate payment of a bill or ask you to provide your debit or credit card information over the phone. If you are suspicious, ask for the employee’s name, badge number and phone number. A real IRS agent won’t hesitate to provide this information. You can then politely end the call and dial the IRS at 1-800-366-4484 to confirm the person’s identity.

 

Holiday Money Savings Tips

Happy holidays giftTo many the holidays are “the most wonderful time of the year” but, to those on a tight budget the holidays can be very stressful. Why not save money this season by following some of these easy tips:

 

 

 

Question Holiday Cards: Send a holiday postcard rather than a card or letter to reduce postage costs. You can even recycle old cards you did not use from prior years.
Question Wrapping Paper. Use your children’s artwork, or have them help you decorate a roll of plain paper. Ask your local wallpaper store if they have old samples they would be willing to give you. You will not only save money, but you will make a gift that is much more memorable.
Question Decorations. Decorate with nature–use pinecones and evergreen boughs around your home. Fill glass vases with peppermint, colored M&Ms, pistachios, or your favorite candy.
Question Entertainment. Check out your favorite holiday movies from the library, drive around town to see Christmas lights, take a winter wonderland hike, or go caroling.
Question Gift-giving. Ask your family or friends to consider drawing names this year. Have everyone bring one gift and then play a gift-swapping game to see who gets what. To make gifting even less expensive, ask everyone to bring something from their home that they enjoy but no longer need.
Question Don’t buy it, make it. Why not give a gift that truly comes from you. It might be something you make, or bake, or it might be a gift of your time. Some ideas? Offer free babysitting service, dog or cat watching, lawn care or gardening services. Your limit is your imagination.

Breaking News: 2017 Retirement Contribution & Social Security Limits

If you have not already done so, now is the time to plan for contributions into your retirement accounts in 2017.

Retirement Contribution Limits

Retirement Program 2017 2016 Change Age 50 or over catch up
IRA: Traditional $5,500 $5,500 none add: $1,000
IRA: Roth $5,500 $5,500 none add: $1,000
IRA: SIMPLE $12,500 $12,500 none add: $3,000
401(k), 403(b), 457 plans $18,000 $18,000 none add: $6,000

Social Security

Item 2017 2016 Change Comment
Wages Subject to Social Security $127,200 $118,500 +$8,700 Annual Social Security employee tax: $7,886.40
Average Estimated Monthly Retirement Benefit $1,360 $1,355 +$5 Change in estimated amount

Don’t forget to account for any matching programs offered by your employer as you determine your various funding levels for next year.

2017 Health Savings Account Limits Announced

Stethescope around hunderd dollar bills

The savings limits for the ever-popular Health Savings Accounts (HSA) are now set for 2017. The new limits are outlined here with current year amounts noted for comparison purposes.

What is an HSA?

An HSA is a tax-advantaged savings account to pay for qualified health care costs for you, your spouse, and your dependents. When contributions are made through an employer, they are made on a pre-tax basis. There is no tax on the withdrawn funds, the interest earned, or investment gains as long as the funds are used to pay for qualified medical, dental, and vision expenses. Unused funds may be carried over from one year to the next. To qualify for this tax-advantaged account you must be enrolled in a “high deductible” health insurance program as defined by HSA rules.

The limits

Health Savings Account (HSA) Limits NEW! 2017 2016 Change
Maximum Annual Contribution Self $3,400 $3,350 +$50
Family $6,750 $6,750 nc
Add: 55+ catch up
contribution
$1,000 $1,000 nc
Health Insurance Requirements
Minimum Deductible Self coverage $1,300 $1,300 nc
Family coverage $2,600 $2,600 nc
Out-of-pocket Maximum Self coverage $6,550 $6,550 nc
Family coverage $13,100 $13,100 nc

Source: IRS Rev Proc 2016-28

Note: To qualify for an HSA you must have a qualified High Deductible Health Plan (HDHP). A plan must meet minimum deductible requirements that are typically higher than traditional health insurance. In addition, your coverage must have reasonable out-of-pocket payment limits as set by the above noted maximums.

Not sure what an HSA is all about? Check with your employer. If they offer this option in their health care benefits, they will have information discussing the program and its potential benefits.