Money Coach : taxes

Think before you click

moneycoach — Thu, 07 Apr 2011 15:04:00 GMT

You have an extra three days to file your taxes this year, but the April 18 deadline is still fast approaching. Tax season can be stressful, depending on whether you have to pay or will get a refund. Either way, the anxiety helps crooks catch people off-guard with income tax-related scams.

Here are some tips to help you avoid tax season malware and phishing attacks.

1. The IRS will not e-mail you. For most tax season threats, this is the No. 1 red flag. If you understand this, you can ignore 99 percent of the tax scams out there.

2. The IRS will not ask for your bank or credit card information. Even if you owe money, the IRS will never ask you to hand over your bank account PIN or credit card number.

3. Don't click links or open attachments in unsolicited e-mails. This is always a good idea, but it is especially important now. Most e-mail-borne malware and phishing attacks can be avoided if you just remember to not click on any link or open any file attachment in an unsolicited e-mail.

4. Don't conduct sensitive transactions over public networks. It's convenient to jump online in a library or use free public Wi-Fi, but don't do business on those networks.

5. Always log out of sites. Clicking on the "X" to end a Web session is not enough. The session will remain alive for a period of time before it times out. Someone could hijack your session and steal your information.

6. Don't share your computer with your kids. Kids don't always understand that they shouldn't click on any link they see, and if they do, they could expose your computer to increased risk.

7. Conduct secure transactions. When you log into your bank or some other sensitive site, you should see "https" in the URL, or a little padlock to indicate that your session is secure.

8. Use strong passwords. Don't make it easy for a crook to figure this out.

9. Use spyware, anti-spam and other software to detect and filter out threats.

10. Remember that if it's too good to be true, it probably is. What are the odds that the IRS has reviewed your return and determined that you're owed more money?

Be cautious and think before you click.

Expecting a tax refund? Here's how you should spend it

moneycoach — Thu, 31 Mar 2011 15:25:00 GMT

It's tax season, and as we all file our taxes and eagerly await our returns, the ideas of how to spend it are floating in our heads like the fabled sugar plums that dance there on Christmas Eve.

While just blowing it is certainly an option, there are some much smarter uses of your tax refund. Here are a few suggestions:

• Pay off your high-interest credit card debt.

• Rebuild your emergency fund. It makes sense to allocate some or all of your tax return towards covering future emergencies.

• Create a car insurance savings account. Consider raising your deductible on your insurance policy and saving on your policy payments. If you have the money to cover the deductible tucked away, you'll enjoy the savings on your premiums.

• Add it to your retirement fund. If you don't want toward retirement, drop it in savings and increase the amount deducted from your paycheck toward your 401(k) plan.

• Purchase a gym membership. If you pay for a year up front, most gyms offer a discount.

• Build your kids' college fund.

• Help your kids save for their future. You can open a Roth IRA with your child, and invest your tax return – up to the amount your child earned last year.

• Start a car replacement fund.

• Give it to a charity.

• Pay extra on your mortgage balance.

• Get your will done.

• Take a vacation.

• Create a checking account buffer by depositing your refund in your checking account, but don't add it into the balance in your check book.

Understanding Health Insurance Reform

moneycoach — Thu, 29 Apr 2010 06:13:00 GMT

More than half of Americans say they still don't understand how they'll be affected by the new health insurance law – what is the positive impact of reform?

Last month, Barack Obama signed into law the most sweeping social program since Lyndon Johnson's Great Society. But most Americans – even those who understand on some level the historical significance of the achievement - are still unsure of what changes to expect … and when.

After months of debate that has played out over the internet, in newspapers, television and radio, most
Americans still don't understand how the nearly $1 trillion behemoth of insurance regulations, tax credits, and new programs, will affect them, according to a recent CBS News poll.

Health insurance reform, now that it has finally been passed, avoids sweeping changes. The law doesn't create a government-run insurance plan as some had feared, nor does it (at first) require that everyone have health insurance, whether they can afford it or not. Instead, much like the social safety net first established by the social security system, the new health plan is designed to assist those who can't get insurance at work and can't afford to buy their own, who lose their jobs, who have pre-existing conditions, or who own or want to start businesses and insure themselves and their employees.

In fact, most Americans are not likely to see any changes at all in the short run.

The Congressional Budget Office (CBO) estimates that until about 2019, 160 million Americans will still be getting their insurance from their employers, paying about the same rates as they would have without health reform. Millions more will continue to buy private insurance.

The centerpiece of the bill – the major change to the way insurance is sold and marketed starts in 2014. The law sets up state-based insurance "exchanges" that will offer consumers and small businesses a choice of standardized and heavily regulated health plans, designed to serve people who aren't offered insurance by a large employer. The exchanges are designed with three main goals in mind:

Insurers will be required to offer you coverage. After 2014, health insurers will not be able to turn anyone down because of pre-existing conditions; even pregnancy and heart disease will be covered. Rates won't be tied to your health any more, although smokers may have to pay more. The oldest people in a plan will pay no more than three times the rate paid by the youngest. Policies you purchase through an exchange will look a lot more like the group plans you can get through an employer.
Subsidies will be available to those unable to afford health insurance. The insurance on the exchanges won't be free, but it is estimated that more than half of those using the exchanges will receive large tax credits to help them buy. For families earning up to four times the poverty line -- $88,200 today for a couple with two kids -- the tax credits will be set so that they pay no more than 9.5% of their income for a fairly basic health plan in 2014.
Health plans will be simpler to shop for. To get the insurance, you'll tap into an exchange set up by your state or a group of states. All the plans must provide at least a standard menu of essential benefits, so you'll have to spend less time scouring contracts for surprising loopholes. Plans will be available in four basic types: bronze, silver, gold, and platinum. Plans can compete by mixing different premiums, deductibles, and co-pays.

In short – health insurance reform appears to be well on its way to doing what its proponents have asked for – making affordable insurance available to every American.

Next post: the down side to insurance reform.

Social Security in Trouble

moneycoach — Tue, 16 Mar 2010 08:02:00 GMT

More warnings issued – the SSA collects less than it pays!

For many years now, pundits and politicians have issued dire warnings about the impending crisis in Social Security. Just as with global warming, the forecasts of disaster and increasing evidence of growing problems meet, in many cases, with excuses, rationalizations and often, outright denial. So it has been with our nation's finances.

For more than two decades, the Social Security Administration (SSA) has collected more money in payroll taxes than it has paid out in benefits each year.

It seems that the time has come for payback … literally!

This year, for the first time since the Congressional reforms of the 1980s, the federal retirement program is projected to pay out more in benefits than it collects in taxes – in fact, nearly $29 billion more. Unfortunately, the government has already spent that money over the years on other programs. Instead, the Treasury Department issued a stack of IOUs - in the form of Treasury bonds. The agency has issued a total of approximately $2.5 trillion in bonds.

In order to maintain he current level of payments to Social Security recipients, the government will have to borrow money in order to start paying back the IOUs, just as the annual deficit is projected to be a record $1.5 trillion this year, followed by trillion dollar deficits for years to come.

Currently, more than 52 million people receive old age or disability benefits from the government's Social Security programs. The average benefit for retirees is slightly under $1,200 a month. Disabled workers get an average of $1,100 a month.

Unless Congress enacts reforms, Social Security's current annual budget shortfall will not affect the current level of benefits paid out. Its a clear warning sign - Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there is a real possibility that the crisis will lead to reduced benefits.

Social Security's financial problems have been looming for years as the nation's 78 million baby boomers approached retirement age. The oldest are already there. As that huge group of people starts collecting benefits — and stops paying payroll taxes — Social Security's trust funds will shrink, running out of money by 2037, according to the latest projection from the trustees who oversee the program. In the short term, the nonpartisan Congressional Budget Office projects that Social Security will continue to pay out more in benefits than it collects in taxes for the next three years. It is projected to post small surpluses of $6 billion each in 2014 and 2015, before returning to indefinite deficits in 2016.

For the budget year that ends in September, Social Security is projected to collect $677 million in taxes and spend $706 million on benefits and expenses.

The national debt — the amount of money the government owes its creditors — is estimated at $12.5 trillion, or nearly $42,000 for every man, woman and child in the country.

Money Coach : taxes

Think before you click

Expecting a tax refund? Here's how you should spend it

﻿Understanding Health Insurance Reform

﻿Social Security in Trouble

Understanding Health Insurance Reform

Social Security in Trouble