CARES Act, Stimulus checks, and other tax law updates

Keeping in touch during these challenging times …

2019 due dates (tax season is not quite over yet)

The IRS extended all of the following deadlines to July 15th:

  • 2019 return or extension filing;
  • Payment of 2019 taxes due;
  • Q1 2020 estimate payment; and
  • Q2 2020 estimate payment.

Most states have followed the same delayed dates (but not all).  Let me know if you have a question on payment and filing. 

So “tax season” will be over soon, yea!

Stimulus checks and other changes

Many people are asking about their stimulus checks and expanded unemployment benefits under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  The Act also has other provisions including tax credits for self-employed affected by Covid-19, student loan payment delays, and relief on mortgage payments and rent.

Of the many posts regarding the stimulus checks and benefits, student loans and 401(k) distributions, here is a good summary from the NY Times

If you want to check on the status of your stimulus check, here is the IRS website to find the status or apply for your stimulus check.  If you expect a check that has not arrived, check out the links in this Huffington Post article

And if you received a check for a deceased relative (over 1 million were sent!), you need to return it to the Treasury, sorry. 

Small businesses

CARES Act includes benefits for small businesses: Payroll Protection Program loans; payroll deposit delays; and tax credits.  The SBA funds for the PPP ran out initially, but Congress added more funding. 

The key is to file so that the loan is forgiven, so that the funds become a grant.  The forgiven loan is not treated as income.  

If you need more information on these programs, let me know. 

2020 tax law changes

The required minimum distributions or RMDs are suspended for 2020.  This way, you do not need to sell funds at a low to withdraw and may even be able to redeposit funds that you already withdrew. 

The CARES Act waives the 10% penalty for early withdrawals from qualified plans for up to $100,000 for coronavirus-related circumstances. The distribution is taxed over three years. And, if the funds withdrawn are repaid to the plan within 3 years, that is treated as a tax-free roll over.  The act also allows loan from the plan up to the lesser of the vested balance and $100,000. 

For 2020, there is an above-the-line charitable donation deduction up to $300.  This should help charities that are responding to those impacted helping them raise money now.

More Scams and Hackers

Be wary of messages asking for personal information because scams are on the rise.  And be careful working from home, as there are more hacker attempts to gain access via the home connections to companies. 

If you want help dealing with any, let me know.

Personal impact

Being cooped up is challenging, even if it is the best way to stay healthy.  Make sure you practice self-care so you can handle this! 

I hope you and your loved ones are all managing this as well as you can.

If you want to just talk, I would be glad to set up a time, just let me know! 

Thank you, and be well

Steven

Brace for the Holidays! Have a plan

As Halloween passes, we know that the season of over-buying and over-eating is approaching, so it’s time to prepare.  You want to enjoy being with friends and family without having the hangover of overspending, or worse, going into debt to finance all the fun. 

Make the gift giving fit with your cash management

Over-buying does not make you happier and usually makes the recipient uncomfortable.  Also, over-spending is likely to make achieving your long-term goals more difficult, which can add to the depression some feel at this time of year.

For gifts, “it’s the thought that counts” rings true.  Most recipients appreciate being remembered for who they are and what they do.  Think back to what you enjoyed most in past holidays and let that guide you.  This can help you stick to your values as you think through the entire process and devise your holiday shopping plan.  The time spent together may be far more important and rewarding than unnecessary giving.

Have a plan

Technology and social media can make shopping easier, but they also make it easier to overspend and end up with credit card debt from funding your gift giving.  

Part of the reason is that many such purchases are spontaneous.  People often regret these unplanned purchases.  Over 70% of people in one survey exceeded their budget and over half bought items not on their list.  This can make the new year bleak (More than 3 in 4 Americans are stressed about going into debt over the holidays — and technology’s not helping ) Counter this by creating a realistic budget, lookout for sales, review your budget to make sure you are on track. 

Budget – If you determine what you can reasonably spend and allocate that to people for whom you want to buy gifts, or give holiday tips, then you have a spending plan that should get you through.  When devising your plan, go back to your financial goals to remind yourself why staying on track is so important.  Include time for present wrapping to avoid time pressure that encourages splurge buying.  Also, you may want to have small gifts on hand for unexpected guests.  You can use budget apps, such as NerdWallet, to create a budget.  When you do, stick to it! 

If the people for whom you are shopping have wish lists, follow them for ideas.  And leave items in your shopping cart overnight to take a second look and avoid regretting a splurge purchase.  Ask “does the person really want or need this?,” especially if you are shopping for yourself!  (It may be wise to avoid, or at least substantially limit, any buying for yourself.) 

Be Wary of Black Friday, Cyber Monday and other retailer tricks

If you do your homework, you can determine if waiting in line or buying on line will be best.  As stated above, create a budget and stick to it.   

Be on the lookout for retailer other tricks like flash sales, loyalty cards, incentives to return for more purchases, misleading refund policies.  Similarly, procrastinating can lead to splurge buying ruled by emotions such as the need to please everyone and get the shopping done.

Avoid scams

With the pressure of the holidays to address all the gift giving, parties and thank yous, stay vigilant for scams.  These can come in the form of bogus IRS and social security calls, credit card offers, computer software deals and fake invoices.  There are many phishing sites you can use to check out whether the offers are legit

Review our Holiday Tipping Guide

As for tipping, see our post Guidelines for Holiday Tips and Gift.

Remember, if you’re unable to tip or give a gift, a thoughtful thank you note will acknowledge those people who are important to you.  You can even make a donation in their name. 

Brace for over-eating and possibly even depression

This blog is does not profess to have any expertise in psychology.  Nonetheless, we have all heard how holidays can be disappointing if not depressing from some.  The Hallmark gatherings promised on TV or social media rarely happen in real life. 

If the holidays are depressing, consider volunteering somewhere, such as a soup kitchen, or getting out for some serious exercise.  Both can lift your mood as well as either help others or improve your health.  Allow time to rest and recover!  And try a warm drink, tea not bourbon, or a warm bath. 

Take care of yourself – it’s hard to help anyone else if you are not in good shape yourself.  But if you are really experiencing holiday depression, speaking to people can help, be that family, friends or professionals.

We wish you all the best for financially sound, and fun, holidays!  And let us know if we can help you plan.

Update on how to stay safe after the many data breaches

If someone manages to steal your social security number, they often try to file a tax return claiming refunds. To prevent this, you either have to file before them or obtain an identity PIN from the IRS on the IRS.gov website.

Here is the link for the ID PIN, and here is the IRS explanation:

An IP PIN is a six-digit number assigned to eligible taxpayers that helps prevent the misuse of their Social Security number on fraudulent federal income tax returns. Call the IRS at 800-908-4490 for specialized assistance,

Please see our prior post, How to stay safe after the Equifax data breach, to learn more about credit freezes and other protections. And let me know if we can help!

How to stay safe after the Equifax data breach

(as also appeared online at IRIS.xyz)

Equifax disclosed last week that the personal financial information of up to 143 million users had been exposed in a massive hack last July. This represents roughly two-thirds of all credit card holders, so you may be affected.

The delay in disclosing is troubling, and the hack raises questions about oversight of the credit bureaus and even about the impact on their management. We can see the impact on investors: the Equifax share price has dropped over 20%

While we can discuss these issues and more, the priority is shoring up your personal credit.

Impact

Was your data taken? There are links from Equifax, Norton and others where you can attempt to determine the impact on you personally. However, these sites seem to default to “you may be affected,” even if you put in bogus information.

The good news is that Equifax has responded to consumer pressure to make certain services free.

Act now

You will want to act as soon as possible to keep your financial information safe.

“There are so many entities who need to check your credit: when you’re renting an apartment, getting insurance, a new cell phone, utilities,” Liz Weston, a financial planner and columnist at NerdWallet, told BuzzFeed News. “But at this point the breach is so great” that taking measures to safeguard your identity is worth it. She recommends instituting credit freezes.

Equifax free service – sign up on line for the complimentary service being provided by Equifax, which provides the following:

  • three-bureau credit file monitoring with alerts,
  • credit report lock,
  • scanning of suspicious sites for use of your social security number,
  • Equifax credit reporting, and
  • $1 million identity theft insurance covering certain out-of-pocket expenses.

Monitor your cards – review your monthly credit card, bank and loan statements for suspicious activity. You have a right to free credit reports so obtain them and review for unauthorized activity.

Also, watch for unexpected calls or mail, such as debt collectors or people posing as IRS agents, because these may be signs that your information may be in the hands of thieves.

Credit freeze – request a freeze on your credit from all three agencies: Equifax, TransUnion, and Experian. Equifax will not charge you but the others will.

Requesting a credit freeze prevents thieves from using your identity to get loans or credit cards in your name, even if your personal information was compromised by the hack. You essentially pay to bar each of three credit reporting agencies — Equifax, TransUnion, and Experian — from providing a credit report without both your explicit permission and a personal identification number (PIN) that temporarily lifts the freeze. (Freezes do not affect financial institutions or companies you have an existing relationship with, only new ones.)

Make sure to place the freeze with all three bureaus and to keep your PINs for unlocking the freezes in a safe place.

“A credit freeze with only one bureau is incomplete protection,” Mike Litt, the consumer program advocate at the US Public Interest Research Group, a consumer group, said. Consumer experts recommended getting a freeze with all three agencies.

There are companies such as LifeLock that provide bundled services. If cost is not an object, that may be the best course of action. Here is the Lifelock response on Equifax.

Fraud alert – if you are certain that your information has been taken, place alert all three credit bureau websites. You can access the TransUnion site here. Some protection is free, but their premium package costs $9.95

If you are the subject of identity theft, there are many resources now that help you report and recover. The Federal Trade Commission website can help devise a recovery plan to implement.

PINs and passwords – the passwords and PINs you use could be the next issue. You may want to change what you use now and update annually, if not more often.

Updates – Equifax continues to provide updates on the status of the hack and their response.

And news sites continue to report on the hack – see this NY Times article.

Summary

There are many steps to take, and the information taken may not be used for some time. So, you will want to take some if not all the steps outlined above. If you have trouble doing so, or if you have questions, let us know.

And for more reading, the Better Business Bureau is one resource for tips on avoiding scams. And, the FTC is a good resource for identity theft.

Good luck and stay safe!

Data and Document Security; Protect Your Stuff!

There are now more tools available than ever to help you organize, access and protect your sensitive data and documents.
man-1187170_1280Well that’s a scary image …

Mobile Devices
The amount of information we store on our mobile devices is staggering: emails, personal contacts, client contacts, banking information, music, and pictures represent only a fraction. You can easily protect this data by enabling the password service, or, in the case of the newer iPhones and iPads, by enabling the fingerprint recognition software.

We have become heavily dependent on these devices that, if we lose them or they malfunction, we could spend days trying restore or replace the data on the device. To protect against this potential headache, you should back up the device regularly. You can also shift more application content to cloud services such as iCloud or G Cloud.

Computer Safety
If you know the sickening feeling of losing an important file that you saved on our computer, then you know you do not want to risk losing all the data on your laptop. That’s why we recommend backing up your important files to an external hard drive, remote server, cloud storage or online back-up program. Some of you may want to make the backup occur automatically, so that all files are stored on a regular basis. Others may prefer to do so manually. If so, be sure to set a reminder that works for you so that you frequently safeguard as much of your important data as possible.

In addition to backing up your files regularly to an external location, we recommend you install anti-virus and malware software. When you buy a computer, an anti-virus program is often included. Make sure the virus definitions are updated constantly. Also, you can add more projection for free, such as Malwarebytes.

Original Documents
There are certain documents that deserve an extra level of security, like original copies of your estate plan (link to planning) for the inevitable. For these documents that hold significant legal and personal importance, place them in Ziplock bags to prevent water damage and store them in either a fireproof safe or a safety deposit box.

Conclusion
Taking these small steps each of you can take now to protect your tax and financial information will prove invaluable if the unexpected occurs.