3 Reasons Your Tax Refund Might Not Be As Big As You’re Expecting

09ba4dd1-bbe3-4f1f-9400-940dc6df347fEveryone tells you not to plan on having a tax refund. If you’re living paycheck-to-paycheck, though, you know where every dollar is going. You might be counting on that money to give you the breathing space you need.

Even if you’re a little further ahead than that, you may still have made plans for your tax refund. You might be planning to pay off a credit card from the holidays or hoping to put a down payment on a car. You might just be hoping to take a little vacation over spring break!

Whatever your plans for the money, it’s a good idea to temper your expectations. Unfortunately, you can’t count on the same tax refund you got last year. Here’s why.

1. Student loan garnishments. 

If you’re behind on your student loans, you might not see much of your refund. If you don’t have much of an income, it’s easy to get behind and it’s hard to catch up. Student loan companies know that, for people with minimal income, tax refunds are a source of a big chunk of money. Also, since it’s not a regular source of income, the rules regarding garnishment are more lenient. Ordinarily, creditors are only allowed to take 15% of your discretionary income if you have one loan, or 25% if you have multiple loans. For a tax refund, the Department of Education can instruct the IRS to apply the full amount of any tax refund you’re due to the balance of your loan.

Even if you’re paid off in full, it might be wise to check with your spouse. This process can also apply to your refund for his or her defaulted student loans. As far as the IRS is concerned, you’re one taxpayer with one set of obligations.

This process can apply to federal student loans, federally subsidized loans and some private loans. You’ll receive a notice of proposed offset from the IRS. You have 65 days from receipt of the notice to object to the offset. Deferments can be provided for up to 3 years for economic hardship and unemployment. They may be provided indefinitely for individuals seeking an advanced degree or for people with disabilities.

It’s also possible the “loan” may just be a paperwork error. If you’ve unenrolled from classes but haven’t yet received a repayment from the school, for instance, you might get your refund back with a short letter. The notice of referral will provide you instructions to request a review.

2. You made more money.

Usually, getting a raise is something to celebrate. If you got one this year, that’s good news for your career future. It’s less good news for your refund. The refund is the difference between what you paid in taxes and what you ended up owing. Your taxes are withheld from your paychecks assuming they stay the same all year. If you got a raise in June, then you were effectively under-withholding for the first half of the year.

Beyond the difference in payment, you may find your raise puts you just above the threshold for credit programs. Credits like the Earned Income Tax Credit (EITC) have income eligibility requirements. If you made more money this year than you did last year, you may not qualify. The same is true for subsidized insurance premiums through the Affordable Care Act (Obamacare). If your income changed after you obtained coverage, you may have to hand back a part of that subsidy.

The EITC is fairly significant, particularly if you have kids. It may be worth your time to look for other deductions you can take to get your gross income under the threshold. Consider working with a professional tax preparer, too.

3. You were the victim of identity theft.

The past few years have seen an increase in tax returns filed fraudulently on behalf of victims of identity theft. A crook uses your Social Security Number and fabricates financial information to get a hefty tax refund, then cashes the check. You’re not only out your tax refund, but also may be facing criminal charges for the phony info on “your” return.

With cuts to the IRS budget this year, its enforcement and investigation of these crimes has dropped. You should contact the IRS immediately if you receive notice that more than one tax return was filed using your Social Security number or if you are issued a W-2 (an income statement report from your employer) by an employer you don’t recognize. These are red flags that someone is fraudulently using your identity.

The FTC recommends you contact the IRS’s Specialized Protection Unit at 1-800-908-4490. You should also prepare proof of your identity, like a copy of your drivers’ license, Social Security card, or passport. The IRS has a form, IRS ID Theft Affidavit Form 14039, that will start the investigative process. Recovering from this crime will take time, but you will get the refund you’re due.

To prevent identity theft, check out First Financial’s ID Theft Protection products – with our Fully Managed Identity Recovery services, you don’t need to worry. A professional Recovery Advocate will do the work on your behalf, based on a plan that you approve. Should you experience an Identity Theft incident, your Recovery Advocate will stick with you all along the way – and will be there for you until your good name is restored and you can try it FREE for 90 days!* To learn more about our ID Theft Protection products, click here and enroll today!**

TurboTax has some great offers for the 2014-2015 tax season! Click here to get started and save with First Financial’s TurboTax microsite. From now until 2/26/15, TurboTax users are automatically entered into this year’s $25,000 Giveaway when they file between the sweepstakes dates and provide a valid email address. One grand prize winner will win $15,000 and ten first prize winners will receive $1,000 each! This is a nationwide sweepstakes.***

*Available for new enrollments only. After the free trial of 90 days, the member must contact the Credit Union to opt-out of ID Theft Protection or the monthly fee of $4.95 will automatically be deducted out of the base savings account or $8.95 will be deducted out of the First Protection Checking account (depending upon the coverage option selected), on a monthly basis or until the member opts out of the program. **Identity Theft insurance underwritten by subsidiaries or affiliates of Chartis Inc. The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions. ***TurboTax is a tax preparation software product offered to our members through the Love My CU Rewards Program and is not a product of this Credit Union.

Article source courtesy of CUContent.com.

Intuit is Working to Resolve Emerging Tax Fraud Problem & Says Issue is Unrelated to TurboTax Product

intuit_blueIntuit Inc. has stated that recent fraud reports are not stemming from a breach of the TurboTax program. Intuit has dedicated all their resources to resolving this issue in conjunction with state and federal agencies.

Intuit has been working with third-party security expert Palantir on a preliminary examination of recent fraud activities, and believes that these instances of fraud did not result from a security breach of its systems and that the information used to file fraudulent returns was obtained from other sources outside the tax preparation process.

Intuit is working with state agencies to address growing concerns over state tax fraud. During this tax season, Intuit and some states have seen an increase in suspicious filings and attempts by criminals to use stolen identity information to file fraudulent state tax returns and claim tax refunds.

“We understand the role we play in this important industry issue and continuously monitor our systems in search of suspicious activity,” said Brad Smith, Intuit president and chief executive officer. “We’ve identified specific patterns of behavior where fraud is more likely to occur. We’re working with the states to share that information and remedy the situation quickly. We will continue to engage them on an ongoing basis in an effort to stop fraud before it gets started.”

As it worked with state governments to assess and resolve the recent issues, Intuit took the precautionary step Thursday, 2/5/15, of temporarily pausing its transmission of state e-filing tax returns. Intuit will be working with the states today to begin turning transmissions back on. Customers who have already filed their state tax returns using Intuit software during this temporary pause will have their returns transmitted as soon as possible. They do not need to take further action at this time. This action does not affect the filing of federal income tax returns, and is limited to those states that require residents to file returns.

To assist any customers who believe they are victims of tax fraud, Intuit has implemented a plan that includes a dedicated toll-free number, 800-944-8596, with direct access to specially trained identity protection agents who will provide comprehensive support and filing assistance. In addition, Intuit will provide identity protection services and free credit monitoring, as well as provide access to all versions of its software or to the assistance of one of Intuit’s credentialed tax experts who will prepare taxes for affected customers at no expense.

“We understand the pain and frustration identity thieves cause taxpayers,” Smith said. “We know how important tax time is and our number-one priority is making sure peoples’ returns are filed timely, accurately, and safely.”  In addition, Intuit will continue to apply the most advanced technologies and techniques on an ongoing basis to prevent and detect any suspicious tax filing activity.

First Financial would like to remind our members that your accounts with us are monitored 24/7 by an experienced team of security professionals for any suspicious or potentially fraudulent activity. First Financial employs the most advanced fraud detection and prevention technology to guard members’ accounts against unauthorized access and use.

  • If our security team observes any unusual activity on member accounts, we will contact members immediately to determine whether the transaction activity is legitimate and authorized.
  • It is also a good practice for members to keep a watchful eye on their accounts and transactions and look for any unauthorized activity or purchases.

Don’t wait until it’s too late! Check out First Financial’s ID Theft Protection products – with our Fully Managed Identity Recovery services, you don’t need to worry. A professional Recovery Advocate will do the work on your behalf, based on a plan that you approve. Should you experience an Identity Theft incident, your Recovery Advocate will stick with you all along the way – and will be there for you until your good name is restored and you can try it FREE for 90 days!*

Our ID Theft Protection options may include some of the following services, based on the package you choose to enroll in: Lost Document Replacement, Credit Bureau Monitoring, Score Tracker, and Three-Generation Family Benefit. To learn more about our ID Theft Protection products, click here and enroll today!**

We will continue to monitor all members’ accounts for suspicious activity. If you have any additional questions or concerns, please give us a call at 866.750.0100 or email us at info@firstffcu.com. Thank you for being a valued member of First Financial.

*Available for new enrollments only. After the free trial of 90 days, the member must contact the Credit Union to opt-out of ID Theft Protection or the monthly fee of $4.95 will automatically be deducted out of the base savings account or $8.95 will be deducted out of the First Protection Checking account (depending upon the coverage option selected), on a monthly basis or until the member opts out of the program. **Identity Theft insurance underwritten by subsidiaries or affiliates of Chartis Inc. The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions.

Article Source: http://investors.intuit.com/press-releases/press-release-details/2015/Intuit-Working-With-State-Governments-to-Solve-Emerging-Tax-Fraud-Problem/default.aspx

 

 

7 Smart Ways to Take Advantage of Your Tax Refund

taxes08Tax season is often a time of stress for many, but it can be a joyful time for the roughly 75 percent of Americans who do receive income tax refunds.

While the refund really means you’re getting back money you loaned to the government at no interest, in practical terms it often means an unexpected infusion of cash into your wallet or bank account. It’s a great problem to have, but what should you do with your windfall?

The best choice for one person may not be the best choice for another. But experts agree on one thing – if you have debt, apply your refund to paying it off, whether it’s credit card debt, student loan debt, or other consumer debt.

If you’re getting a big refund ­– a check in the ballpark of $1,000 or more for taxpayers who don’t have a side business – consider adjusting your withholding so that you’ll have that money available to you during the year.

Here are the seven smartest things you can do with your refund:

Pay down debt. If you have any consumer debt – student loans, credit card balances or installment loans – pay those off before using your refund for any other purpose. Car payments and mortgages aren’t in this category, but you can also consider paying extra on your principal.

Add to your savings. Can you really ever save enough? You can use the money to build up your emergency savings, your kids’ college fund, or put it toward a specific goal, such as buying a house or a car, or financing a big vacation you’ve been dreaming about taking.

Add to your retirement accounts. If you put $2,500 from this year’s tax refund into an IRA, it would grow to $8,500 in 25 years, even at a modest 5 percent rate of return, TurboTax calculates. If you saved $2,500 every year for 25 years, you’d end up with more than $130,000 at that same 5 percent rate of return!

Invest in yourself. This could mean taking a class in investing, studying something that interests you, or even taking a big trip. Think about doing something that might add value to your life, such as taking a photography class or purchasing a special camera that could become a new hobby and potentially a side business in the future.

Improve your home. Consider putting your refund to good use by adding insulation, replacing old windows and doors, or other improvements that are more energy efficient. Or perhaps it’s time to remodel your bathroom or kitchen. You’re adding value to your home, and at the same time you’re improving your living experience too.

Apply your refund toward next year’s taxes. This is common among self-employed taxpayers, who are required to pay quarterly taxes since they don’t have taxes withheld. By applying any overpayment toward upcoming tax payments, you can free up other cash.

Splurge on something you’ve always wanted to do. If you’re out of debt and have substantial savings, this may be the time to take the cruise to Europe or trip to Thailand that you’ve always dreamed of taking. Such an experience can be life-changing, and you never know what impact it will have on your future until you actually do it.

Article Source: Teresa Mears for US News, http://money.usnews.com/money/personal-finance/articles/2014/03/28/7-smart-ways-to-take-advantage-of-your-tax-refund

4 Ways Scammers Can Steal Your Tax Refund

48d9f43eab68404d0dc0def19d14ba6dIdentity thieves LOVE tax season.

Any thief who has your personal information can easily file a tax return, collect the fraudulent refund and leave you waiting months to get your own refund back and clear up the issue. Unfortunately, it’s only getting worse – last year the IRS launched 1,492 investigations into tax-related identity theft, where criminals used stolen personal information like Social Security numbers to claim fraudulent refunds. That’s up 66% from 2012 and more than 200% from 2011.

Here are some of the ways scammers use to steal your identity and how to avoid becoming a victim.

1. Fake calls from the IRS. Last month, the IRS said a nationwide phone scam had swindled $1 million from consumers in what the agency called “the largest scam of its kind.” As part of the scheme, callers impersonating IRS agents told victims that they owed taxes and needed to pay by wire transfer or a prepaid card. Other scams are carried out through email, and ask for personal information like a Social Security number or birthdate — which can later be used to claim tax refunds.

To protect yourself, be wary of any correspondence from someone claiming to be from the IRS. The agency says it usually reaches out by mail, and it will never ask for personal information via email or phone. If you receive something questionable, reach out to the agency yourself and verify that it’s legitimate.

2. Rogue employees. Be careful about giving out your personal information. Don’t ever give away more personal information than you need to and don’t be hesitate to ask someone why they need any of your personal information.

Some tax preparers could potentially be a scam artist. To avoid being fooled, be wary of any preparers who charge fees based on the size of your refund and never let a preparer ask for the refund to be deposited into an account in their control rather than sent straight to you. To help you detect if you’ve been scammed, be sure to regularly monitor your bank accounts and credit card statements for any suspicious charges.

3. Data breaches. Data breaches occur when hackers break through a company’s privacy walls and access private customer information and scarily enough, it’s becoming increasingly common. Once that information is in a fraudster’s hands, it’s easy for them to file a tax return in your name. If you know or suspect that your information was compromised during a data breach, consider signing up for identity theft protection (see below) or start regularly monitoring your accounts on your own. Be sure to investigate any charges you don’t recognize, no matter how small they are.

Most of the time if someone has a stolen card, the thief will often test it with a small transaction first in order to see if the card is activated, to make a bigger purchase. And because there’s a good chance you will be more susceptible to identity theft after a data breach, make sure to strengthen your passwords utilizing at least 8 characters, including upper- and lower-case letters as well as numbers and special characters (!@#$%).

4. Snail mail. It’s not as common as online identity theft these days, but many fraudsters still use the old-school strategy of stealing mail from mailboxes to piece together the information they need to file a tax return in someone else’s name. Other times, thieves will go as extreme as dumpster diving – it’s a low-tech way to easily retrieve your information, so make sure you ALWAYS shred any personal documents.

Another easy way to protect yourself is to file early. Many scammers are able to get fraudulent refunds because they file before the victim does. If you file first, the IRS will be forced to investigate when a second return from the same person arrives.

LifeSizePennyDon’t wait until it’s too late! Check out First Financial’s ID Theft Protection products – with our Fully Managed Identity Recovery services, you don’t need to worry. A professional Recovery Advocate will do the work on your behalf, based on a plan that you approve. Should you experience an Identity Theft incident, your Recovery Advocate will stick with you all along the way – and will be there for you until your good name is restored.

Our ID Theft Protection options may include some of the following services, based on the package you choose to enroll in: Lost Document Replacement, Credit Bureau Monitoring, Score Tracker, and Three-Generation Family Benefit. To learn more about our ID Theft Protection products, click here and enroll today!*

*Identity Theft insurance underwritten by subsidiaries or affiliates of Chartis Inc. The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions.

Click here to view the article source by Blake Ellis of CNN Money.

4 Wise Ways to Spend Your Tax Refund

A vacation would be fun, but you’ll get more bang for your buck if you invest in energy-saving improvements or maybe even a new car.

taxes refunds uncle samAmericans often wrestle with competing desires to spend, save or invest the cash from their tax refund checks.

Many people say they are being responsible with their refunds: 42% plan to use the money to pay down debt and cover bills and 25% plan to save it, according to a survey by TurboTax.

Others are splurging: 15% of taxpayers plan to treat themselves to a vacation or shopping. But advisors say that even if you’ve done everything right — you have an emergency fund, no debt and are maxing out your retirement account contributions — you might want to reconsider spending the refund on a 70-inch TV or a cruise. Here are some of their suggestions below.

1.       Rebalance your portfolio.

With the stock market hovering near five-year highs, advisors normally would recommend investors rebalance their portfolios by selling stocks and using the proceeds to buy bonds or whatever assets they need to get back to their target allocations. But some investors might be able to rebalance without selling their stocks.

Have questions about investing?  Set-up an appointment with the Financial Advisor located at First Financial Federal Credit Union.*  Appointments can be made at any branch location, or by calling 732.312.1565.

2.       Prepay your bills.

Even if you’re not living paycheck to paycheck and can afford to spend your refund on a new iPad without falling behind on your bills, there may be better uses for the cash. Though it’s not nearly as exciting, one can use the money to pay off future bills. Why not use this money to put yourself ahead of the game?

Prepay your car insurance bills or car loan payments. Write the phone company a check, or save the money for the home insurance bill you know is coming up in a few months. But don’t forget to check monthly statements to be sure you aren’t paying for something you didn’t request, experts say.

3.       Make home improvements.    Yellow helmet full of dollars

If you’re going to spend it, take a look at your house.  If your furnace is on its last leg, now may be your chance to replace it. Have you wanted to install new windows? Using the money on your home could lift your property value and prevent future damage, advisors say.  People who make energy-efficient improvements might also qualify for a residential energy tax credits expiring at the end of this year. To get the maximum credit of $500, taxpayers need to make $5,000 in qualifying improvements to their stoves, heating or air conditioning systems, insulation, roofs, water heaters and windows and doors. Learn more here.

Did you know First Financial has a home improvement loan?**  This loan is perfect for those who don’t think they have enough equity in their home.  Or maybe you’ve been itching to put in a new deck or pool for the nicer weather.  Stop into any branch to ask us how you can get started with a home improvement loan, give us a call, or apply online here.

isolated red car back view 014.       Buy a car.

If the list of needed car repairs is piling up, some advisors say it might be best to put your check toward a new ride. A $3,000 refund can cover the typical 10% down payment needed on a $30,000 loan for a new car, or the 20% down payment needed on a $15,000 used car.  Don’t forget that First Financial’s auto loan rates are the same whether you buy new or used!***

Those with existing car loans may also have a greater shot at refinancing to get a lower rate (some saving hundreds of dollars a month) if they use some of their refund cash to reduce the size of their loan.

Try our auto loan calculator called AutoCalcubot to help you see how you might fare with monthly payments on a vehicle you’d like to purchase.  The application works through Facebook, but you don’t need to have an account or even be logged in to try it!  Simply enter what your vehicle costs, the amount you plan to put as a down payment, and your term – and you’ll get our rates and what your monthly payments would be.***  You can also save your results for later, email them to a friend, set up text or email alerts to see when our rates change, or apply right online if you like what you see.

Article Source: http://money.msn.com/tax-tips/post.aspx?post=9a813b25-fba7-4882-b37b-778710cfa8f1

* Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members.

**Available on primary residence only, subject to underwriting guidelines. Subject to credit approval. A First Financial membership is required to obtain a home improvement loan and is available to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties, NJ.

***Subject to credit approval. Rates shown are lowest possible and may not apply to every borrower, and higher rates may be charged depending on credit qualifications. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties.

10 IRA Tax Tips

Knowing these 10 IRA tax tips can help you when saving for retirement. When preparing taxes and setting up retirement accounts, it’s important to know how your IRA or individual retirement arrangement affects your tax return. Being knowledgeable will allow you to make smart decisions when contributing to an IRA and how to handle the account in the future until you request disbursement at retirement.

Use these ten IRA tax tips to make smart decisions regarding your retirement future:

  1. Money contributed to a traditional IRA is not taxed until disbursement. Not including Roth IRAs, the person who owns a traditional IRA is not taxed until they request money from the IRA during retirement. Usually, the person’s tax bracket is lower during retirement, saving the person money by waiting to pay taxes until they are retired.
  2. IRAs can only be owned by one person. When the person owning the IRA dies, a beneficiary can be awarded any portion of the monies in an IRA that remains.
  3. Use the correct form. When making nondeductible contributions to a traditional IRA, the taxpayer has to use Form 8606, Nondeductible IRA’s.
  4. Know if you are eligible for a tax credit. Use form 8880, Credit for Qualified Retirement Savings Contributions to find out whether you qualify for a tax credit.
  5. Persons can contribute to a traditional IRA up to the age of 70 years old.  If you are 70 1/2 years or more old at the end of a tax year, you may not contribute to a traditional IRA that year.
  6. To be eligible to contribute to a traditional IRA, the person who takes out the IRA or their spouse must have taxable income from specific sources. Income can come from a salary, wages, self-employment income, tips, commissions, or bonuses. Also included are taxable alimony and maintenance payments that the owner of the IRA received during the tax year. Income that does qualify includes deferred compensation, rental property income, pension or annuity compensation, and dividend and interest income.
  7. Contributions to an IRA can be made up till the tax filing date. You can contribute for the applicable tax year (the previous year) until April 15.
  8. Funds withdrawn from an IRA are taxable the same year they are withdrawn. Withdrawals of only deductible contributions are fully taxable.
  9. Early withdrawal may be taxable. Owners of traditional IRAs who withdraw monies before they are 59-1/2 years old may have to pay an additional ten percent tax.
  10. Late withdrawal may be taxable. Owners of traditional IRAs who do not withdraw the minimum amount after they turn 70-1/2 may owe an excise tax.

Contact the First Financial’s Investment and Retirement Center to set up a no-cost consultation at 866.750.0100 or visit our website for more information.

Article Source: Made Manual, Instructions for Life http://www.mademan.com/mm/10-ira-tax-tips.html#vply=0