7 New Year’s Resolutions For A Richer 2017


The New Year is a great time of renewal. That makes it a good time to make bold, decisive changes in your life. Leave behind the baggage that was 2016 and start fresh with a blank slate in 2017. If you’re looking for some resolutions to improve your personal finances, we’re pleased to offer seven ways to make 2017 the year of the dollar!

1.) Track your spending

If you’re looking to take your first steps toward financial literacy, figuring out where your money goes should be at the top of your list. If you don’t know where your money goes, it’s going to be tough to follow through with any other money plans. You may have a general sense of how much you spend, but after a month where you’ve recorded every dollar, you’ll have a much better picture. Using apps like Mint or Personal Capital can automate the process. You might even find that keeping track of what you do with your money encourages you to spend a little more judiciously.

2.) Make a budget

About 70% of Americans live financially spontaneous lives. They don’t make a plan for spending or saving. When asked why they chose not to do so, the most common response was that the family spent all the money anyway. This is a circular problem. If you don’t have a budget that includes setting aside money for long-term expenses and savings, you’ll end up spending all your money on unplanned things and events. The best way to stop the cycle is to sit down and make a budget that modifies your spending to be more in line with your priorities.

3.) Get out of debt

Easier said than done, right? However, there’s no bigger stumbling block to financial security and wealth building than debt. It’s hard to save for long-term goals when so much of your monthly income gets eaten up by interest and fees. There are a variety of methods you can use to help accelerate your payoffs. For instance, you can add an extra $50 or $100 to your credit card payments. Or, you can focus all your payment resources on the highest interest debt until it’s paid off and then move it all to the next highest for snowballing your way to freedom from debt.

4.) Start an emergency fund

The best way to avoid going into debt is to have some money on hand to handle the occasional, yet inevitable, emergency. Most Americans, though, can’t come up with $500 in such instances. Set a specific goal, like adding $10 per month to a savings account. At the end of the year, you’ll have more than $100 available in case something goes wrong.

5.) Start a retirement account

You can’t save for what you don’t think about. When retirement is years or decades away, it’s difficult to incorporate thinking about it into your daily routine. If you have a retirement account open, you’ll get monthly statements, which serve as reminders. The challenge, though, is taking that first step. Don’t let perfect be the enemy of good. While there are important differences between Roth and Traditional accounts, either one is better than no retirement savings at all. If your job offers a 401(k) matching program, sign up to get at least the full matching funds amount – it’s free money. Do a little bit of research, then open the account that seems like the best idea.

6.) Automate your savings

Saving money takes willpower. Because it’s hard to practice self-denial on a constant basis, that extra $5 you’ve earmarked for savings can very easily turn into a mid-morning coffee. Fighting that impulse is a constant struggle. That’s why it’s easiest to avoid the decision altogether. Change your direct deposit to put some of your paycheck directly into a savings account, where you won’t even think of spending it impulsively.

7.) Get educated

Knowledge is power, and that’s especially true in the world of personal finance. What you know about your money goes a long way toward determining how much of it you get to keep. There’s a lot to learn, but you’ve got a wealth of information at your fingertips. Resolve to read one personal finance article a week (subscribing to this Blog can be a great start). Not only will this give you good ideas for improving your personal financial situation; you’ll also spend more time thinking about your money. That will lead to positive results down the line!

Happy New Year from all of us at Destinations Credit Union. We hope you have a safe, happy, and prosperous 2017!

Your Turn: What resolutions are you making this year? Will 2017 be the year you join a book club, quit smoking or spend more time with your family? Let us know in the comments!.


When A Savings Account Isn’t A Savings Account


For many credit union members, a savings account is a formality. They know, in theory, that saving is important. Maybe they got a bonus at work and stuck $50 in a savings account. Other savings options  that come with higher rates, such as IRAs or 401(k) accounts, took priority and that initial deposit was quickly forgotten.


Tax-advantaged retirement accounts are fantastic, but it’s unlikely that retirement is your only savings goal. When it comes time to put a down payment on a house, buy your next car or plan an exciting vacation, the money in those retirement accounts will be locked up tight. There’s no way to get to it without taking on massive penalties and paying a lot in taxes.

If you want your money to be there when you need it, no matter when “it” is, now might be the time to take another look at the humble savings account. Even if it’s not your primary savings vehicle, a savings account can offer tremendous benefits. Let’s look at some ways to get the most out of it!

1.) Dividend rate isn’t the only consideration

Many experts shun savings accounts, citing low interest/dividend rates as their chief concern. If you’re looking to maximize your returns, putting all your money in a savings account isn’t the smartest plan. It’s unlikely that your financial plans call for maximizing returns on all your investments, though. While it’s true that higher return investments do exist, savings accounts offer unique benefits.

First, savings accounts are NCUA insured up to $250,000. If something unthinkable happens, you’re promised to be reimbursed for your losses. That’s quite a lot of security for your hard-earned cash.

Another benefit of savings accounts is their liquidity. If you need the money in your savings account tomorrow, you could get it. You can withdraw cash in person, at a branch or from an ATM. You also have access by using our online banking or mobile banking to transfer funds to another account to make payments on a loan. You can also transfer funds to your checking account to conveniently use your debit card without worries of overdrafting.

2.) Automate, automate, automate!

You know that exhausted feeling you get after you’ve been shopping? It never seems fair. Sure, there was some walking involved in your day, but the total amount of physical activity was fairly limited. All you did was make a ton of decisions.

That feeling has a name. It’s called decision fatigue. Making a commitment to something takes willpower and energy, and you’ve only got so much in your tank. Waiting until the end of the month to decide what to do with your household surplus can encourage splurging. Thinking about sensible decisions takes willpower, and you’ve already used your allotment for the month.

That’s why it’s great to know your savings account can be automated. You can set up automatic transfers between your checking account and your savings account or even make it part of your employer direct deposit. Make that decision once and then never have to think about it again. You can save your willpower for more important decisions, and let your cash reserve grow.

3.) You need an emergency fund

Even if you have a high-paying job, you’ve only got as much security as the economy allows. Your company could succumb to competition.Your job could be eliminated. You or a loved one could get sick, requiring you to leave your job or cut back to fewer hours.

Other emergencies could happen. Your car could break down. You could face a big medical bill or fall victim to a scam. What would you do to cover your costs in these situations?

Situations like these are among the leading causes of bankruptcy. People find themselves forced to rely on credit to get through such circumstances. With no way to repay those charges, people are stuck in a constant cycle of debt repayment that ruins financial plans for years.

The best way to avoid this calamity is with a strong emergency fund. How much should you have saved? Most experts agree that 6 months of living expenses is a good target, though that number may need to be higher if you work in an industry with a tight labor market. What’s a living expense? Count anything that you couldn’t cut if you absolutely had to do so. For example, your housing, utilities, insurance, debt maintenance and food. Don’t include luxuries like dinners out or monthly subscription costs that you could stop paying if money got tight.

It’s important to keep that emergency fund accessible. If it’s in a brokerage account, you risk needing to access that money when the market is down. A savings account provides the security and flexibility that you need for your rainy day fund.

4.) Keep your funds separate

If you already have an emergency fund, you may have some other savings goals. Suppose you plan to start a business, but need start-up funding to do so. You might want to put away money gradually over time to make your dreams a reality.

If you keep that money in your checking account with the rest of your funds, there can be a real temptation to spend it. Resisting that urge depletes some of that willpower, which makes it easier to make impulsive choices in other areas. Instead of relying on your self-control to keep those savings safe, you can build separate accounts for each specific savings goal. This will let you track your progress while also keeping the money safe from an Amazon splurge.

Look for ways to increase your dividends

At Destinations Credit Union, we have an easy way to increase your dividend rate – it’s our Kasasa® Cash Rewards Checking Account.  By doing easy things that you probably already do, you can earn a really high rate on your checking account and attach a high rate Kasasa Saver to that account.  Then, at the end of the month, your rewards are automatically swept into the savings account.


What are my options for digital banking?

Plenty. We live in the digital age, where you don’t even need to leave your couch to do anything; from buying groceries to meeting the love of your life. Destinations Credit Union is part of the many financial institutions allowing you to bank from a mobile device, and even through a mobile app!

In fact, The digital age is ushering in a new era of green banking, and the planet is healthier for it already. Mobile banking saves gas that you would spend on making a special trip to a branch. It saves paper that would be used on statements or receipts. Of course, the advent of the credit card is cutting down quite a bit on the paper, metals and energy used to make, track, and replace dollars and coins. Sites like Paypal or GoFundMe allow you to pay or be paid instantly, which cuts out the need for paper in checks or, again, receipts and paper money. The same goes for the ability to pay bills automatically online, either through your online/mobile banking page or through the company’s website. 

Are there any risks to digital banking? 

While the benefits are fantastic, digital banking does come with a few small risks. Some people find keeping a budget to be more difficult when they can just look at their phone and rationalize a purchase they don’t need simply because their balance seems okay. This is best solved with separate accounts for savings and spending, so you never think you have more money than you do. Also, although you can do quite a lot of your banking online, you can’t do everything. There are still some important tasks that you need to do in person, including setting up new accounts and making deposits over a certain threshold.

Of course, the biggest concern with banking in the digital age is the ever-looming threat of hackers. Robbery no longer looks like a tall man in a ski mask with a revolver. Instead, most robbery happens through identity theft, perpetrated by a much scarier, faceless criminal who could be anywhere. Protecting security is at the forefront of everyone’s minds, and Destinations Credit Union uses industry-leading security protection technology. You can help by choosing strong passwords and avoiding online banking from public computers. Fortunately, identity theft is still quite rare. In fact, online banking has helped reduce much of the danger that comes from having paper with personal information on it sitting in the garbage can for anyone to find. The benefits that online banking provides continue to outweigh the risks. 

Are there any banking initiatives that directly support environmental sustainability? 
For starters, an ethical financial institution is one whose primary goal is to support sustainability and the long-term health of its community. Credit unions nationally have led the charge by identifying and supporting local businesses. The less distance goods have to travel, the less CO2 gets pumped into the atmosphere. Destinations Credit Union has also contributed to green initiatives across the community, such as conversion to a mostly paperless system and our annual shred day. Buying an energy-efficient car or building green features into your home can help build a sustainable future. 

How can this help me? 

In addition to the long-term benefits of going green, sustainable banking offers many advantages. Online banking can be done at any time and any place – no waiting for the branch to open, no wasting extra gas money driving to the ATM. Having receipts and monthly statements emailed to you keeps them all in one place, which allows for easy organization and budgeting.

The ability to be paid instantly allows you to, well, be paid instantly. No more waiting for a check to cash or losing it at the bottom of your purse. With automatic bill payments, you can put the bills right out of mind and never have to worry about forgetting them again. This does great things for your stress level and your credit score. In the end, saving the earth can also save you time, money and energy. 

How can I go green banking? 

In the year 2016, green banking is easier than ever. If you’re ready to be a part of the future, take these four easy steps:

  • Download our app for easy access to your accounts from anywhere in the world (note, you must be enrolled in and know your online banking credentials to use the app).
  • Enroll in paperless statements and get your important financial updates via email.
  • Set up direct deposit to split your paycheck between your savings and your checking and/or to make loan payments.
  • Use online bill pay to automatically and securely pay your bills each month.


Lessons from the Richest Nation Ever


As of June 2015, America is the richest society ever, after a strong spring in which Americans accumulated $1.4 trillion in total assets. With the Dow and NASDAQ recently hitting record highs and home prices finally reaching pre-bubble levels, there’s no telling what records might be broken in the future.

Not everyone is enjoying this windfall, though, and you may be one of those who are wondering where your gold-plated Ferrari is or why your etched crystal brandy decanter isn’t as jewel-encrusted as your neighbor’s.  If so, it might be a good time to take stock of your surroundings and draw some lessons from the country about accumulating wealth.

Who has all that money?

A very small number of people have a very large share of American wealth in 2015, as many middle class families are still feeling the effects of the 2008 financial crisis and The Great Recession.  A recent Pew study found the gap between the rich and the middle class is at a 30-year high, and most of the typical American’s net worth is tied up in their home.

While America’s total net worth is at a record high, the typical American household’s net worth is $81,200, down two percent in the last five years.  The top 10 percent of households are worth about 40 times more than the typical household, with an average of $3.3 million.  The top one percent of the top one percent of American households is even more staggeringly rich, with about 16,000 families owning 12 percent of American wealth, about $630 million each, on average.  More distressing, about half of  

Americans have a net worth of $0 or less.

Who are the rich people in the country?

The rich tend to be older than the country as a whole, with millionaires being 57 years old on average, while the typical American is in his or her late 20s. Millionaires typically come from more humble backgrounds, with about 80 percent being first-generation millionaires.  They are likely to be married, have two children and live in middle-class neighborhoods.  In other words, millionaires look a lot like the middle class, except a few years older and wiser.

What do I need to do to become a millionaire by my 50s? 
The first steps to accumulating wealth are the things you’d expect: 

  • Spend less than you earn
  • Save the rest
  • Invest patiently and
  • Own your home

It might seem obvious, but those four steps can be difficult and the difference between understanding the concepts and achieving them can be daunting.  If you’re looking for some guidance, Destinations Credit Union can help. Our online accounts and tools such as MoneyDesktop make budgeting a breeze and we offer a variety of savings products for members of any financial background. We have home-buying specialists who can guide first-time homebuyers through the process, from putting together a down-payment to securing one of our competitive mortgage rates. 
What might be more surprising is that the rich tend to own their own businesses, with about 4 out of every 5 American millionaires identifying as self-employed or retired from self-employment.  There are 28 million small businesses in the United States, defined as companies with 500 or fewer employees, and small businesses have created nearly 2 out of every 3 net jobs in the last 20 years, currently employing more than half of all working Americans.
Owning a piece of the American economy is a clear path to wealth, and with the knowledge base that comes with 21st century technology, that path is more well-worn than it has been in the past.  Seven out of 10 new small businesses with more than one employee survive for at least two years, half last for at least five years, and a quarter of those new small businesses are expected to still be going strong in 2030.  Over half of the small businesses created this year will operate out of their owners’ homes, often starting as an extension of their founder’s favorite hobby. 
Are there any other ways to grab the brass ring?
If you’re not interested in starting a business, you can still build a comfortable savings account by putting away part of each paycheck. It may be difficult, but it’s not impossible.  Of course, there are other options too. One woman in Las Vegas won the lottery four times in the last 25 years, so you might want to borrow her lucky rabbit’s foot.

Sources:

   

Take Your First Steps Before They Take Theirs: Financial Planning For The New Parent

The first few days after you bring your baby home is an exciting time that can also be a bit stressful. So can the first few weeks. Many parents also find the first few months stressful, while others are stressed over their parental commitments a while longer. It’s easy to get caught up in sleepless nights, organic baby food, and reading every book you can find, but sometimes parents forget an obvious priority: teaching and helping your child to save money as they grow up.


1.  Set up a savings account for your child and make regular deposits.

You don’t have to know what you want to do with your child’s savings yet. However, the first step is as simple as opening a savings account for your child. Studies show that young adults who had savings accounts as children make better financial decisions, are more prepared for financial emergencies and plan better than their peers who didn’t grow up with savings accounts. So, for now, open a savings account, put a few dollars into it every paycheck and invite your child to participate by making deposits of their own when he or she is old enough. Destinations Credit Union offers savings accounts specially designed for kids. They offer dividend rates and we have educational resources so your child can learn to be smart with their money. You can find out more here: http://www.destinationscu.org/accounts/savings/youth-accounts.html.

2.  Start saving for college now.

Most parents know they need to save for their child’s college education, but few seem to realize how much college will cost. Education costs have been rising much faster than inflation, and if you’ve been out of school for a few years, you might be shocked by the costs. To make matters worse, and more expensive, many universities are receiving fewer public dollars, and getting a larger portion of their income from tuition, thus passing the cost on to students.

All told, experts expect four years of public school to cost around $250,000 by 2030. It could be even higher. While it’s difficult to imagine saving that much money, don’t give up or neglect to even try. First, think of college costs as a pie that’s been split into thirds. The first third will be paid for by your loans and awards your child earns. You’ll pay for the second third using the income you earn at the time. Only one-third needs to come from a college savings fund. Granted, one-third of $250,000 is $83,333.34, and that’s a lot of money. Take a deep breath, because you have decades to save it, and you have a secret weapon: compound interest, which Einstein called the most powerful force in the universe.

Destinations Credit Union offers Coverdell Education Accounts, which allow you to contribute up to $2,000 a year and withdrawals are tax-free.

3.  Focus on what you can control.

If you’ve been a parent for more than a few minutes, you’ve had at least one moment of pure panic while thinking about the future. Perhaps, on one of the few nights your baby allows you to sleep, you decided to keep yourself up by listing every terrible thing that could happen to you, your partner or your child. There’s so much you can’t control, of course, so place your focus on the things you can control.

Disaster sometimes strikes, and when it does, it’s usually unexpected. But there’s nothing you could do to prevent it. We don’t like to think about life ending, but it is inevitable. Instead of panicking over it, plan for it. While you’re at it, start planning for some of the less dramatic problems that might crop up. Start with life insurance, then look into other savings products and programs that are designed to protect your family.

One mistake many new parents often make is to immediately start throwing money at college savings while ignoring their overall financial picture. If you read the numbers in the previous point, it’s easy to see why. Start by building a nest egg that can carry you through 6 to 9 months of lean time, and then build your retirement fund. Money market accounts are a good way to build your short-term nest egg, because you can access your money if you need it.

As for retirement, you may not have given it much thought since your initial conversation with HR. Now is the time to see what else you need. Remember, you can take a loan to pay for college, but you can’t get a loan to retire. Even if you want to put college money away now, you can still get tax incentives if you contribute to your retirement at the same time. Browse Destinations Credit Unions‘s retirement options, or call us at 410-663-2500 if you want some help figuring out what’s right for you.
Sources:

http://finance.yahoo.com/news/why-toddlers-savings-accounts-much-170151606.html

Don’t Panic: A Last-Minute Guide To Tax Preparation

It’s the second week in April. Spring is in the air. The flowers are blooming. We’re just past opening day for the Orioles (Go O’s!). As you begin to enjoy the pleasantness of this time of year, do you have that lingering feeling that you’ve forgotten something?

April 15 is Tax Day. That’s the day all returns must be postmarked or e-filed to the IRS. If you haven’t started yet, you may be feeling a bit of panic as the deadline races up to meet you.

In the immortal words of Douglas Adams, “Don’t panic!” There’s still plenty you can do, and so long as it’s in the mail or in the Internet tubes by midnight on April 15, you’ll be fine. Take a deep breath, grab a cup of coffee, and make a plan. Also consider these three handy tips: 

1.) You can file for an extension

If you do nothing else to prepare for tax day and there’s no hope for getting your return done on time, do this. The IRS will, in most cases, approve an automatic 6-month extension for individuals. Form 4868 asks you to estimate your tax obligation, your total payments and the balance due. If you’re due a refund, there’s no problem. You’ll get your refund as soon as you file your return and you’ll have until Oct. 15 to do so. If you owe additional taxes, Form 4868 also includes a way to send estimated payments.

If you’re filing on behalf of a corporation or partnership, you can still qualify for an automatic extension of five or six months, depending upon the entity type. The form to fill out there is 7004. It’s a bit longer, but requires the same basic information and also includes the option to pay your estimated tax immediately.

There’s a penalty involved in late payment. You’ll be charged 5% each month or part of a month your return is late, to a maximum of 25%. These charges will be at least $135 or the balance of your taxes due, whichever is smaller. The IRS may excuse these penalties if there’s a good reason you didn’t file on time. Attach a statement to your return explaining why you didn’t pay on time (not your request for extension) and the IRS may forgive the penalty amount. These exemptions are typically granted for people who were out of the country or deployed to a combat zone for a significant part of 2015.

You’ll be responsible for interest on the amount due, plus penalties. The IRS charges 0.5% per month or part of a month your account is past due. They’ll charge that on the whole unpaid amount. So, if you were to pay your tax bill in full on April 16, you’ll be charged a full month’s interest.

As expensive as filing for an extension can be, it’s better than the alternative. If you don’t file, the IRS will eventually file for you. They don’t have any incentive to get you any deductions or credits. If you end up owing more than $25,000 in interest and penalties, the IRS will be knocking on your door!

2.) Filing isn’t actually that hard

For most people, filing your taxes takes less than half an hour. If you worked only one job, have one bank account, and don’t have a lot of deductions, you won’t have to fill out more than a few forms. The 1040-EZ is pretty accurately named. It is, in fact, easy.

You really only need your W-2 and you can file from your computer desk. Make a game of it. Set a clock- see if you can beat a 20-minute time goal!

3.) Don’t forget the little deductions!

If you’re really scraping to cut your tax bill, there are a few easy deductions you might miss. For example, if you subscribe to a financial newsletter, that’s a deductible expense. If you consulted with an attorney or another paid professional to prepare a will or trust for your assets, that’s also deductible.

Your medical expenses can be somewhat flexible, too. For instance, if you installed a hot tub on the advice of a physical therapist, that can be deductible. Laser eye surgery can also be a deductible expense if it promotes the proper functioning of the body.

There’s a thin line to walk with aggression. It’s very unlikely you’ll get any grief from the IRS provided you can prove most of what you’re claiming. At the same time, saving a few bucks on your taxes isn’t worth a massive headache.

If you’re getting a refund, make sure to directly deposit it to your Destinations Credit Union account!


SOURCES

New Discoveries In TurboTax Fraud: Keep Informed And Stay Safe!


With the April 15th deadline now visible on the calendar, many Americans are finally sitting down to do their taxes. The good news? A standard return isn’t that hard and there’s still plenty of time to get it done. The bad news? One of the most popular online tax filing services is still compromised.

New reports in the Washington Post describe a new breed of tax fraud using the online platform. Previous attacks would focus on filing fraudulent returns using stolen personal information. Such returns were usually riddled with errors designed to inflate the amount of a potential refund, which would be routed to an account far away.

New attacks seem to have taken a different direction. Criminals use stolen email and password information to amend recently filed returns. The only change they make is the account number into which any refund will be deposited.

While only a few people have been victims of this kind of fraud, investigators are still working with TurboTax to identify the source of the leak. In the meantime, additional security measures have been added to online accounts. New logins will be required to answer credit report style identity verification questions, like former addresses, roommates and employers. So-called “knowledge-based authentication” (KBA) procedures are of suspect value.

Fraudsters with access to personal information can find it remarkably easy to get more. Real estate transaction databases can quickly eliminate possible choices about former addresses. The multiple choice nature of the questions makes it possible to mechanically “crack” the authentication procedure in relatively short order.

To make matters worse, fraudsters are getting better at covering their tracks. According to security blog KrebsOnSecurity, more and more scammers are registering accounts using stolen identity information on IRS.gov. Because IRS.gov accounts aren’t necessary for e-filing, many people never have cause to create one. One thing they are useful for, though, is getting copies of past tax returns. This is a vital step in protesting a fraudulent return.

Scammers have identified this weak point in fraud prevention and begun registering accounts using stolen personal information. This presents one more hurdle in the face of fraud reporting. It also gives scammers more time to take the money and run. Without an IRS.gov account, the IRS is bound by policy not to disclose any information on a tax return to anyone not designated on the return as an approved party. This does mean they’re protecting the privacy of criminals, but there’s little they can do about the policy at this point.

The core of the problem, according to Krebs, is that the IRS uses those same KBA procedures. Sophisticated scammers are increasingly adept at bypassing these procedures. That means one less barrier between them and your money.

If you think you’ve been the victim of tax-related fraud, there are still steps you can take. Read on for three ways you can fight back against tax fraud and get your money back!

1.) Create an IRS.gov account and use a strong password

The current KBA authentication protocol can be broken into relatively easily. If you register your account now, you can create a much stronger password to protect yourself. At time of press, the IRS is not allowing new accounts to be created, but new procedures for account verification are forthcoming.

Once you’ve created your account, use a strong password that includes numbers, letters and symbols. Make it unique to your IRS account to reduce the possibility that your password will be compromised. Once you create your login information, write it down and put it with this year’s tax documents (preferably locked in a safe location). You’ll need it again next year!

2.) Request a copy of this year’s tax return

If you think your information has been used to file a fraudulent tax return, you’ll need a copy of the return to file a dispute. If you can’t get it with an IRS.gov account, you’ll need to get a hard copy. The IRS has a form for this and they’ll charge a small fee for processing.

The from you’re looking for is Form 4506. This will get you a printed photocopy of the return, including all information about refund destination. This may help you track down the stolen money, and it will definitely help you in proving to the IRS that this wasn’t your work.

3.) Beware of ‘Money Mule’ scams

Increasingly, international fraudsters are having difficulty getting the money out of the country. That’s why they turn to Americans who are desperate for a buck. They’ll advertise on sites like Craigslist for “financial processing assistants.” They use your checking account to receive the funds, then you’ll wire or send a portion of the proceeds to another bank. It’s one way of eliminating the paper trail of tax fraud. That’s been the laundering scheme of choice for many tax fraud perpetrators this season.

It’s clearly illegal and very dangerous, but it also makes it possible for scammers to steal money in the first place. Beware of any job solicitation that offers to pay you for your ability to have a checking account. If they were a legitimate business, they could get one all their own and wouldn’t have to pay you for the privilege!

SOURCES:

https://krebsonsecurity.com/2015/03/sign-up-at-irs-gov-before-crooks-do-it-for-you/

Prior Year Tax Returns


Brought to you by Destinations Credit Union
If you didn’t file your taxes for the last couple of years because you didn’t think you made enough to pay taxes, what should you do?  You might be missing out on some refunds that you should have had!

“Paying” your taxes can be a misnomer for many folks. This year, 8 out of 10 people who filed taxes got a refund. The average refund was nearly $3,000, according to the IRS.

Many people think of tax refunds as bonuses, but it’s really an interest-free loan you gave the government. Filing your taxes is how you collect on that loan. If you don’t file, the IRS is only too happy to keep that money.

As a matter of fact, the window is closing on returns from prior years — with a big chunk of money still left unclaimed. About 1 million taxpayers didn’t file 2011 returns and are owed refunds. They have until April 15 to file for 2011 or they lose out on that money for good.

There’s quite a bit of money still unclaimed. About $1 billion in total tax refunds are still owed by the IRS. More than half of the refunds are for more than $698, with most of that money earmarked for seasonal or part-time workers. The reason for this is simple. If you only work for part of the year, your employer still “withholds,” or pre-pays income taxes, as though you were going to work all year.

Other people who are eligible for refunds include students and families. You may be entitled to a refund from so-called refundable credits. Programs like the Earned Income Tax Credit offer you a tax credit you can get even if you don’t owe taxes. The Earned Income Tax Credit provides relief for people with low incomes. Other refundable credits include the Child Tax Credit, which offers refunds of up to $1,000 per child. You might also qualify for the American Opportunity Tax Credit, which offers refunds for tuition and other expenses related to higher education.

Whatever the source, you won’t know for sure until you file. If you owed money, the IRS would not be so laid back about collecting, so there’s not much chance you’ll end up having to pay more. You’ve got nothing to lose and quite a bit to gain.

Ready to start filing your back taxes? Here are three steps you need to take!

1.) Gather your documents

You’ll need all your tax documents from the year for which you’re planning to file. Remember, these refer to year you earned, not the year you were supposed to file. Your 2011 tax return was due in April of 2012, but covers what you earned between Jan. 1 and Dec. 31, 2011.

If you’ve lost these forms, employers are supposed to keep them on file. Few people ever ask for them, so your employer’s HR representative may not be used to finding them. The information may also be available online if your employer uses an electronic workforce management system. It might take a few days for your employer to find the appropriate forms, but since you’ve waited this long, there’s no harm in waiting a few more days.

If you can’t find your documents, don’t guess! Filling in tax forms with incorrect information might be considered tax fraud, especially if you guess low. The IRS might accuse you of fudging the numbers to get more money. Make sure you’re only entering accurate information.

2.) Use the appropriate software

Tax rules and rates change from year-to-year. Always check in the upper left-hand corner of the federal forms for the year of the return. You’ll want to make sure you’re using the forms for the year you’re filing.

Most tax filing software will let you file prior years at a discounted rate, but you’ll still have to pay for e-filing. In some cases, you can deduct this amount from the refund you’d receive, so you won’t have to pay anything upfront. If paying for tax forms is too frustrating, you can always find the forms in the IRS form library.

3.) Plan for the money

It’s tempting to think of a tax refund as free money and spend it on a creature comfort or a silly luxury. In fact, the most common decision people make about their tax refund is to purchase a big-screen TV. For many people, this is the biggest influx of cash you’ll get all year. Spending it foolishly is a big mistake.

If you don’t have a plan for the money, it’ll disappear into a thousand momentary indulgences. Make a plan once you see how much you’ll get back. Just make sure your plan achieves a goal that’s important and impactful to you financially.

A prior year tax return would make a great start to paying down your credit card or other high-interest debts. It would also make a great emergency fund that could keep you out of debt in a crisis situation. This money could also be the start of a retirement nest egg that will get you in the habit of saving.

SOURCES:

Direct Deposit: Safe, Simple And Convenient


There’s a very short list of things that really haven’t changed in the past 50 years: apple pie, your fourth-grade teacher’s fashion sense and paper checks. Despite the advances that have been made in financial technology, paper checks are really about the same instruments they always have been. In a digital world, they’re increasingly expensive, cumbersome and insecure.

While larger companies have been using an all-electronic system for paying their employees for years, many smaller employers already have or are moving to direct deposit of your net pay as well. Direct deposit transmits your paycheck from your employer’s business account directly into your checking, savings or pre-paid account(s). You still get a pay stub or an electronic equivalent from your employer that lists the amount of the transfer along with any deductions, like taxes, health care or retirement.

What you won’t have to do is hold on to that check until you can find time to get to a branch. Payroll deposits clear instantaneously, which means the money is generally available in your account the same day.

Direct deposit really is the way of the future. Many large employers and some benefit providers require it, and it’s easy to see why. Let’s look at three reasons why direct deposit is right for you. 

1.) Safety 

Think like a criminal for a second. A paycheck is the largest check most people see on a regular basis. This makes it a tempting target for theft. Think about how your employer would react to someone picking up your paycheck for you. Someone could pretend to be a spouse, babysitter or friend doing you a “favor.”

While the signature requirement is some protection, many check-cashing establishments don’t look closely for a match. It’s remarkably easy to cash a stolen check and the law provides little protection. Your employer might be sympathetic, but they’re probably not willing to issue you a second paycheck. The burden would be on you to prove the theft before you could get your salary.
With a direct deposit, those concerns are virtually nonexistent. There are no paper checks to keep safe. No one needs to pick up your paycheck for you. There’s no concern that someone else will accidentally be given your check. The whole transaction is handled seamlessly by computer. 

2.) Simplicity 

Believe it or not, the process of payroll is incredibly complicated for companies. Many of them hire outside firms at great expense to ensure they’re accurately paying their employees in compliance with various state and federal regulations. One of the costs involved in payroll production is the printing of checks. Paper checks must be printed, signed and recorded, all of which requires labor.

The cost of writing, verifying and safeguarding a paper check is about $1 per employee per pay period, assuming no lost checks or pay disputes. The lost time to distributing and depositing those checks is about $2 per employee, so it costs businesses about $3 to print and distribute paper checks. Direct deposit costs about half as much.

These savings may seem insignificant, but they add up quickly. Your employer spending less money on payroll means more money to pay you. Whether those cost savings result in a lower-priced product, more investment in the business or higher wages, you benefit. When your employer comes out ahead, so do you.

3.) Convenience 

Obviously, direct deposit saves you an errand every pay period. The stress of fighting rush-hour traffic to make it to a branch office before closing time on payday is considerable. There’s also no need to worry if you got your paycheck deposited in time for same-day processing. Say goodbye to account guessing games.

Beyond the obvious conveniences, direct deposit opens up a slew of other possibilities. You can more easily automate your savings by depositing a portion of each payroll into a savings account and the rest into your checking. You can pay bills more easily online since you get confirmation your funds are available. You may also be able to secure lower fees or a higher interest rate on your checking account!

Paperless payroll saves trees, it saves time and it saves frustration. It does all of this while being safer, faster, and more secure. If you’re unsure about your direct deposit options, stop by or call Destinations Credit Union. Our helpful representatives can get you the information you need to set up direct deposit and can even help you organize your deposits to meet your financial goals.

Call, click, or stop by Destinations Credit Union today!  If you are getting a tax refund, make sure you designate Destinations Credit Union to receive your refund via electronic deposit! 

SOURCES: