Tax Season Identity Theft

Tax season is like the Super Bowl for identity thieves and that means that you need to be on high alert for scams. To help break down some of what you need to guard against, we're joined by security expert Adam Levin. Here's the scams at the top of his list:

IRS Phone Scam

• Where someone pretending to be from the IRS contacts a consumer stating they owe back taxes and threatens them with jail time if they don't pay. These fraudsters prey on fear and many consumers give in, paying a bogus fee through prepaid card, wiring money or even an iTunes card. Golden rule - the IRS never calls, emails or texts. If you receive these calls, hang up.

W-2 Scam

• Imposters are using phishing schemes to target the HR departments of businesses asking for W-2 or W-9 information. In these spear phishing schemes, the emails appear legitimate but they are designed to steal important financial documents. If you receive this email or text, don't respond.

Child ID Theft

• Fraudsters target children's data because they have clean, pristine credit profiles and they can use this data for a host of ID theft schemes, including tax related, medical, financial and even criminal. 
• Parents need to be on high alert for child ID theft and should create a credit profile for their child and then freeze it.

Medicare and Social Security Scams

• Medicare and Social Security beneficiaries across the country report receiving calls from scam operators (frequently with foreign accents), who claim to represent Medicare, Social Security, or an insurance company.
• These callers claim that new Medicare, Social Security, or supplemental insurance benefits cards are being issued or that the beneficiary’s file must be updated. The scam artist asks the consumer to verify or provide their personal banking information, which the scammer then uses to commit ID theft.
• The Center for Medicare and Medicaid Services and the Social Security Administration will not call you to ask you to disclose personal or financial information.

To combat tax fraud, consumers need to file early, take advantage of the PIN if they have been a victim of fraud, use long and strong passwords, enable two factor authentication, use legitimate tax preparers, store important tax docs on an encrypted thumb drive and never give out personal or financial info to someone who contacts you, even if the caller ID looks legit.

“Better Off” is sponsored by Betterment.

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Tax Prep 2016

Tax prep season is in full swing and the good news is that due to a local Washington DC holiday, the tax -filing deadline is April 18^th, rather than the traditional April 15th, so you will have an extra three days. That doesn’t mean that you should dawdle. In fact, there may be a good incentive to get your act together earlier this tax season: fraud prevention. Last year the IRS acknowledged that criminals had accessed IRS.gov to steal information on nearly 400,000 taxpayers and states are also on high alert, after the filing of fraudulent returns, which prompted TurboTax to halt e-filings. While the IRS announced several measures the agency says will prevent tax fraud, filing early may be your best bet to prevent others from trying to file a return in your name. Another anti-fraud tip to remember: the IRS never initiates contact with taxpayers about their accounts through e-mail, text messages or other social media. If you get an unsolicited e-mail claiming to come from the IRS, do not open attachments or click on any links and forward it to the IRS.

Whether you prepare your own returns or engage a professional, create a file called “2015 Taxes”. In it, put last year’s return, which will be your guide to what’s missing. Be on the lookout for tax documents that are rolling in, including 1099’s and W-2s and information from bank, investment/mutual fund companies and lenders should have all sent tax documents by mid-February. If you didn't receive them, they may be  available online. Gather your credit card summaries and review checking accounts for deductions, like charitable donations and job search costs.

This is the second tax season where you will need to tell the government whether or not you have health insurance. Taxpayers are not required to send the IRS information forms or other proof of health care coverage when filing their tax return. However, if you have coverage through the Marketplace and qualify for a premium tax credit, you must file a tax return with Form 1095-A to claim the credit and to reconcile any advance payments made on their behalf in 2015. A reminder, the penalty for not having health insurance has increased: it is the greater of $325 per adult or 2 percent of your taxable income. There are a number of exemptions - go to HealthCare.gov to see if you qualify.

Many of you have asked me whether or not you need to hire CPA. If you have a complicated financial life, you may want to pay up for a professional. For example, those who are self-employed may want someone who is familiar with Schedule C; who can advise on the best type of retirement plan to use; and who will let you know if you should file a Form 1099 to report any payments you made to others. Or if you had a lot of investment activity, sold property, have to file an estate tax return for someone else, or if you are one of the over 5 million taxpayers who are subject to Alternative Minimum Tax, you may want to guidance to help minimize the tax consequences. If this is the first year that you are hiring a tax preparer, make sure that he or she is legitimate -- use the IRS database to check on credentials.

Low-and moderate-income taxpayers should use the Volunteer Income Tax Assistance or and Tax Counseling for the Elderly, which is operated by the AARP Foundation’s Tax Aide Program. If eligible, you can get FREE help by visiting one of the more than 12,000 community-based tax help sites staffed by volunteers. To find the nearest site, use the IRS' VITA/TCE Site Locator.

If you are going it alone and your income is $62,000 or less, the IRS provides free tax prep software called “Free File”. If you don’t qualify, you are left with three main choices: Turbo Tax, H&R Block and Tax Act. Most tax preparers that I spoke to say that Turbo Tax may be the best bet, even though it costs more than its competitors. They cite Turbo Tax’s easier to use platform and the interface’s ability to save time and reduce errors.

Whether you prepare your own returns or hire a pro, be sure to e-file, because the IRS says that the the error rate for a paper return is about 20 percent, compared with an e-file return error rate of about one percent. And if you are due a refund, it will come faster if you e-file.

If you are worried about an audit, take heart in the fact that due to IRS budget cuts, audits of individual taxpayers fell to the lowest rate in 11 years. Less than one percent (0.84%) of individual taxpayers – just over 1.2 million individuals -- were audited in the 2015 fiscal year, the lowest level since 2004. That doesn't mean that you should go cray. The top audit red flags include: Not reporting income, a large change in income, being self-employed and taking higher-than-average deductions. And the highest earners, especially those with incomes of more than $1 million, are much more likely to be audited than everyone else. Just have plenty of back up records and documentation if you fall into one of these categories.

#261 Tax Prep Boot Camp with Ed Slott

Ed Slott CPA is a nationally recognized IRA expert, television personality and best-selling author who has dedicated his life to educating Americans on saving for retirement and the intricacies of IRAs.  He was named “The Best Source for IRA Advice” by The Wall Street Journal and is the author of numerous best-selling books. His web site www.IRAHelp.com. He started our conversation with an overview of what has changed for this year's tax filing season (not too much) and then explained why well-prepared taxpayers should not be afraid of an audit. (NOTE: Ed says that the key to the entire  tax preparation process is to keep flawless records and documentation throughout the year!)

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Ed also focused on the need for retirees to shift gears in retirement. While there may be some lucrative opportunities, there are also challenges/minefields, like those thorny stealth taxes, which can trip us up.

The old favorites include the whopping 50 percent penalty for not taking your required minimum distribution (RMD) and not making estimated tax payments, but last year's change about IRA rollovers is also causing a new headache among some retirees.

As much as everyone complains about paying taxes, Ed says that tax rates are still the lowest they have been in years. That means that now could be a good time to move funds from tax-deferred vehicles, like 401 (k)s and IRAs into tax free Roth IRAs. Ed also noted that the very best retirement strategy is to work as long as you can. Extra income can prevent you from dipping into your nest egg; with earned income, you can continue to make Roth and spousal Roth IRA contributions (though once you turn 70 1/2, you can NOT make traditional IRA contributions); you may be able to delay your RMDs from your company-sponsored retirement plan; and most importantly, working longer will help you combat the reality of longevity!

Thanks to everyone who participated this week, especially Mark, the Best Producer in the World and the worst LinkedIn User. Here's how to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

#208 Taxes, RMDs, Target Date Funds

As we say goodbye (and good riddance!) to February, there were lots of questions about tax preparation, Required Minimum Distributions and whether or not to use target date funds. Thanks so much to Peter, Mike and Lisa, all of who offered extra information for our listeners!

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Here was the CBS This Morning segment, where we celebrated America Saves Week and in case you missed it, President Obama dropped the F-Word last week!

Not that one, but he endorsed a Department of Labor proposal, which would require brokers to act in a customer’s best interest—the so-called FIDUCIARY duty—when working with retirement investors. We talk a lot about fiduciaries on the show, so we'll be keeping you posted on what happens next.

Thanks to everyone who participated and to Mark, the BEST producer in the world. If you have a financial question, there are lots of ways to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

#207 Zero Tax in Retirement

CFP and CPA Michael Goodman, President of Wealthstream Advisors, wants everyone to strive to pay ZERO taxes in retirement. He says that the ability to do "micro" Roth conversions and to utilize  IRA Charitable Rollovers, which allow taxpayers age 70 ½ or older to make tax-free charitable gifts of up to $100,000 per year directly from their Individual Retirement Accounts to eligible charities, including colleges, universities and independent schools, could help many minimize taxes during retirement.

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Michael's appearance was perfect for this show, because Neil, Don, Claudio, Peter, Richard and Warren all asked about retirement accounts. We also fielded questions about Required Minimum Distributions, so once again, here's the FINRA RMD calculator that I mentioned.

Thanks to everyone who participated and to Mark, the BEST producer in the world. If you have a financial question, there are lots of ways to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

#206 Valentine's Day with IRA Expert Ed Slott

Retirement guru Ed Slott returns to the program to offer great advice during the hectic tax prep season: ABC or Always Be Contributing (to retirement!) While he favors a Roth over a traditional IRA, he just wants you to put yourself first in order to navigate this YOYO (You're On Your Own) environment.

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Ed also provided analysis of President Obama's budget and its implications for owners of Roth IRA accounts; potential changes to contribution rules that could allow some taxpayers to make after-tax contributions (aka the "Mega-Backdoor-Roth"); and why we all need to be prepared for stealth tax increases in the future.

For more great information, check out Ed's website: IRAHelp.com.

Chuck from MD and his wife are planning to retire in a few years and wanted a strategy for downsizing; Marie asked about taking her Required Minimum Distribution -- here's the FINRA RMD calculator that I mentioned; and Charles asked whether he should sell a large position in a single stock.

"A Proud Grandmother" inquired about the best graduation gift and Remy is considering the best way to help out parents' in need.

Happy Valentine's Day! To celebrate, here a fun CBS This Morning segment: How to Talk to your Spouse about Money!

Thanks to everyone who participated and to Mark, the BEST producer in the world. If you have a financial question, there are lots of ways to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

Aunt Jill on the 404: IFTTT, Apple Earnings, Credit Scores

Check my audition to be co-host of the 404 (Justin Yu is on vacation) as Jeff Bakalar, Ariel Nunez and I discuss Jeff's favorite new toy, IFTTT ("If This, Then That"); failed NYPD hashtags; a preview of Facebook and Apple earnings; and what you need to do to improve/manage your credit score (shameless plug alert: Credit.com).

Aunt Jill on the 404: Super Bowl, Stock Market Correction, Taxes

It's my first visit of 2014 with Jeff Bakalar, Justin Yu and Ariel Nunez on CNET's 404. We digest the lame Super Bowl, the sad news about Philip Seymour Hoffman, my shameless plug for the idiot-proof Ventev chargers  and of course,  I answer lots of great questions from the best fans around!