Has my identity been hacked? What should I do?

The Equifax hack on top of all the others has many of us anxious.  As the internet meme goes “They had one job.”  (They failed.)  Equifax, as a credit reporting agency, held what I call the “ID theft kit,” name, date of birth, Social Security Number, birthdate, driver’s license, addresses current & prior, and credit account numbers.  I have pretty much the same quality of data.  That’s why I’m so careful with my security procedures!

People are asking how to find out if they were affected.  You can ask Equifax on their website or phone, but they’re making up the answers (see media reports).  If it’s 143,000,000+ people, I think it’s reasonable to assume that we all were.  The US population of 300 million includes children, seniors and folks who have no credit records.  The Equifax hack could cover pretty much everybody else.

So, what now?  All your information is out there for sale on the dark web.  A Yahoo! Finance story indicates there’s proof of an uptick in fraud attempts already.

My suggestions:

  • The key step to take now is to put a CREDIT FREEZE on your accounts with Equifax, Experian, TransUnion and CBC Innovis.
    • It’s not free, except at Equifax (for the next 30 days). Expect to pay $5-10 each unless you’re already an ID theft victim or 62+.
    • Keep the PIN you’re assigned in order to remove the freeze or “thaw” it.
    • You will need to thaw in order to apply for credit – a car, a house, a credit card — but it just takes a few minutes. So if you’re shopping right now, hold off, but get back & do it soon.

Equifax: 1-800-685-1111 (3) or www.freeze.equifax.com

TransUnion: 1-888-909-8872 or TransUnion.com/securityfreeze

Experian: 1-888-397-3742 Experian.com/freeze

Innovis: 1-800-540-2505 www.innovis.com/securityFreeze/index


  • Equifax has offered “free” ID theft protection for one year, but is taking credit cards for auto renewal. I don’t see a reason to pay them – or to trust them.  I’m skipping it.  You can buy ID theft monitoring from Lifelock or one of the other players, but count me unconvinced. (http://www.reviews.com/identity-theft-protection-services/)
  • Check your credit report free at https://www.annualcreditreport.com/index.action. Under federal law, you’re entitled to a report every year from each of the 3 major bureaus.  If you cycle them one every 4 months, you can be on top of it.
  • Then, don’t make it any worse. Practice safe habits yourself:
    • Password protect your computers, cellphones & tablets. Treat them like cash in public; don’t turn your back.  Then take care disposing of them and their stored data when they die.
    • Enable auto update to keep all software updated – especially operating system (eg. Windows) & browsers.
    • Password protect your modem & routers. Don’t use public wi-fi to access secure sites.
    • Use strong (long, complex, random) passwords and use them once. (Try a PW manager:  https://www.pcmag.com/article2/0,2817,2407168,00.asp)
    • Maintain anti-virus & anti-malware programs on all devices. (Yes, you might need to pay for that: https://www.pcmag.com/article2/0,2817,2372364,00.asp.)
    • Set your browser to advise you of risky sites & then don’t visit them. Don’t click on pop-ups.
    • Don’t use unsecured email for sensitive information like SS numbers!
    • Never open email attachments unless you know exactly what they are and you’re expecting them from that person. Learn how to check the sender (http://www.phishing.org/what-is-phishing).
    • Use 2-factor authentication (which requires a texted or emailed code) on bank & investment accounts & anything really critical.
    • Back up your files periodically somewhere secure: on an encrypted drive or online.

The Federal Trade Commission (FTC) has lots of good info:


Please feel free to query me about my security procedures. And ask at your doctor’s office and *anywhere* anybody asks for your SS number or anything else sensitive!  I’ve seen incredibly sloppy procedures in the medical and banking fields  — and they have the “ID Theft kit” too.

Be careful out there.




Year-End Tax Planning Tips 2016

It’s almost year-end.  Consider some planning opportunities to reduce your tax bill and increase any refund.  Let’s estimate your tax liability in the 4th quarter to best utilize some of these strategies.  If you have income without withholding, 4th quarter payments are due January 15th 2017 to avoid penalties.


  • Make charitable contributions before 12/31: Worthy causes abound!
    • Political contributions are not deductible, but many of your favorite causes may have 501(c)(3) entities that accept deductible contributions in addition to their political or lobbying arm. Watch for “legal defense & education” funds, etc., and the magic language – tax-deductible to the extent allowed by law!
    • Don’t forget that many of your museum, zoo, public TV & radio contributions may be wholly or partially deductible. Find that receipt or email; save the PDF & bring it or upload it to my portal.
    • Use envelopes &/or checks at church, temple or mosque and get the letter! Cash is not deductible, and a cancelled check is not enough for contributions over $250.
    • Check your cell phone bill if you do the $1 or $10 donation texts.
    • Document your volunteer service. Unreimbursed out of pocket expenses and travel/mileage may be deductible; your time is not.  There’s a form on the website at 1taxfinancial.com.
    • Clear out the closets & basement; call or check the website for a worksheet to value donations.
    • If you’re over 70½ and taking required minimum distributions from IRA’s, the “qualified charitable contribution” has been made permanent. You can contribute directly to a charity from your IRA and not report the income.  For many retired folks, this can provide large savings.  Ask me how.


  • Review your investments. You may be able to take some gains at rates as low as zero percent, or reduce your taxable income by taking up to $3,000 a year in losses.


  • Some home energy credits have been extended through this or beyond. Contact me for details.


  • Timing: Many deductions and credits have income limitations or phaseouts.  And rates have increased the last few years for upper-income taxpayers.  You may lower the tax for one year or both if you:
    • Can defer or accelerate deductible expenses. Making your January mortgage and tax payments in December or paying outstanding medical bills may save tax – or not.
    • This strategy requires some planning, but can work for many people. With itemized deductions, shifting timing can save tax by taking the standard deduction in alternate years.


  • Reduce your tax & save for the future: Boost your 401(k) now, or anytime you get a raise – before you start spending it.  Or open an IRA if you don’t have an employer plan.  If you own a business, retirement plans offer a golden opportunity.  You can do an IRA up until April 15th, but some plans require action before year-end.


  • If you may owe, up your withholding before year-end and avoid underpayment penalties.


Employee Benefits Open Season:  If you still have time & want help determining tax benefits, call!


Post-Election Update:  The incoming administration in DC may result in major tax changes.  It’s possible that rates might go down for you, especially if your income is higher.  If you can push income off into 2017, it might be beneficial.  There have been numerous proposals for tax reform in recent years, but no movement due to the gridlock in Congress.  Some of these proposals could be beneficial.  Stay tuned.

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Tracking your financial info is easy too. PC Magazine highlights Best Mobile Finance Apps. Everybody with multiple bank & credit card accounts should try using an aggregator to simplify life and track spending. These are secure and don’t allow transactions, only review of your income & expenses — in one place. Don’t need to trust me, read about security in PC Mag.

Post-Windsor Refunds of Taxes on Spousal Health Insurance

Married same-sex couples need to act now to correct their marital status with employers (only marriage counts, not domestic partnership) and start the process of obtaining refunds for past years’ overpaid taxes.

*If* you are married, and *if* you or your spouse have been receiving “domestic partner” health insurance benefits through an employer, you have paid tax on those benefits. DOMA did not permit the pre-tax treatment allowed heterosexual married couples.  IRS has now released the procedure for claiming those refunds. 

Perhaps unfortunately, the ball is in your employers’ courts.  Refer your HR or Payroll to IRS Notice 2013-61.  Many of them may resist filing the amended returns for prior years; it’s your money, push harder!  In any event, you need to make them aware of your marital status and ensure that 2013 is correct before year-end.

Here’s an industry summary if you want more technical info:  http://www.journalofaccountancy.com/News/20138794.htm

If you are married, contact me to discuss your situation.  You will be required to file a Married return for 2013.  While some of you will receive larger refunds (and will want to amend back years), some of you will be paying more tax!

Feel free to pass this info on to your married friends.  Their financial lives may be getting more complicated.  Suggest they call me to talk!  I’m easy to reach.


Are You Charitable?

Are You Charitable?

Many of us are, and we like to make sure that we’re maximizing our tax benefit when we give.  That way, we can give more!  As one nonprofit executive said, “People donate because they are generous, but the amount is determined by tax policy.”

We may *think* we know what’s required to deduct charitable contributions, but do we really?  In 2012 (in Durden v IRS), the Tax Court disallowed a $25,000+ deduction for one couple’s contributions to their church, for which the taxpayers had cancelled checks and letters.  The judge even indicated that he believed that the contributions had been made!  Outrageous, but the moral of this story is that you must precisely comply with the substantiation requirements.

Recordkeeping – Proving it to IRS

For any cash contribution over $250, you must have:

(1)   a “contemporaneous written acknowledgment”

(2)   from an exempt entity qualified under section 501(c)(3)

(3)   which includes specific language,

(4)   for a gift or donation to further the exempt purpose.

Let’s examine these requirements.

(1)   Contemporaneous means a receipt or letter dated prior to the filing of your tax return – usually that’s before April 15th.  Most charities send receipts in January or February.  If you don’t have it, get it before you file.  Several taxpayers have attempted to get receipts later (Durden), even after audits commenced, but I’ve seen undated receipts, too.

(2)   Churches are not normally required to file applications to qualify under 501(c)(3).  All other entities are listed on the IRS website.  Make sure you know before you give.  Many entities solicit gifts for political work &/or lobbying, but also have a foundation arm which engages only in permissible activities – religious, educational, charitable, scientific, literary, etc. with a public purpose.

(3)   The written acknowledgment must state whether or not the exempt entity provided any goods or services in consideration for the contribution.  If so, a good faith estimate of the value of the goods or services must be included.  Only the excess over the value received is deductible.  Museums & zoos often indicate a value to membership; the additional amount is deductible. Often a church will refer to “intangible religious benefits” only; this is to clarify that no estimate of value is required under the regulation.

(4)   A gift must evidence donative intent.  Participation in games of chance is specifically excluded.  You can’t take a deduction for anything you buy from a charity – in a gift shop or used goods store – or raffle tickets, bingo cards, split-the-pot contributions.  If you buy an item at a silent auction for *more* than its value, the excess is considered a donation and can be deducted, but you’d better be prepared to prove the excess.

Below $250, you need a bank record (cancelled check or detailed statement); personally prepared records are not sufficient.  So, if you want to take a deduction, no cash!  Or use envelopes if your church offers that recordkeeping option.

For payroll deduction contributions, you need both a paystub or W-2 and a pledge card that shows the name of the donee(s), such as United Way, Combined Federal Campaign or the specific organization(s).

Noncash Contributions – What about donations of stuff?

Clothing & household goods donated to Goodwill, Salvation Army, AmVets,  St. Vincent dePaul, etc. must be in at least good used condition.  Over $250, you need a receipt and a detailed list of items. My FMV NonCash Charity spreadsheet or FMV NonCash Charity PDF incorporate a price list.  For larger contributions, photos wouldn’t hurt; if you take ‘em with your phone, you can email to me for your file. How much can you give?  The practical aggregate limitation on these contributions is $5,000 because….

For contributions over $5,000 (usually antiques, art, jewelry, collections) an appraisal prepared by a qualified appraiser must be obtained and submitted with the return.

It is possible to substantiate and deduct more than $5,000 of clothing, household goods and similar property (say from an estate or home downsizing), but it’s complicated.  Talk to me first.

Volunteer Work – Do you have deductible expenses?

You can’t take a tax deduction for the value of your services but you can deduct your unreimbursed out-of-pocket expenses.  These would include the cost of phone calls, stamps, paper, supplies (such as for teaching religious education), tickets to take underprivileged kids to events (but not your own ticket), etc.  If you’re required to wear a uniform, the cost of buying and cleaning is deductible if the uniform is unsuitable for normal wear. Also allowed are transportation expenses incurred in performing donated services and reasonable meals and lodging while away from home (overnight).

However, you must maintain detailed records of your out-of-pocket expenses – receipts plus a written record of the time, place, amount, and charitable purpose of the expense.  If you spend over $250, you also need an acknowledgment from the charity, like the one here.

One major caveat:  you can deduct the cost of attending a charitable or religious convention if you’re a chosen delegate, but there can be “no significant element of personal pleasure, recreation, or vacation in the travel.”  So go, but don’t have any fun.

Mileage incurred in serving the entity’s exempt purpose also qualifies.  See When is mileage tax deductible? for recordkeeping requirements.


Other Special Situations – IRA’s & Stock

There are special rules for donations of appreciated securities (stock) too.  You can actually save even more tax with these donations.  Call me before you make a decision.  Coordination between the charity and your broker is necessary.

Qualified charitable distributions from your IRA may be another good way to make contributions.  Especially designed for those required distributions to folks who don’t need the income and don’t itemize deductions, this technique allows for a donation to be given directly without paying tax.  Talk to the bank or broker who is trustee of your IRA.  At this point, it expires in 2013.


Tax Reform & Charitable Contributions?

In the discussion of tax code reform/modernization/simplification, charity comes up as a topic.  While most stakeholders don’t support eliminating the deduction, it does constitute a “Tax Expenditure” worth about $50 billion a year.  Assume there will be more discussion.

With that much money at stake, also assume IRS will continue taking a hard line on compliance.  Don’t be another test case; everybody flunks.

As usual, I’m available to discuss any of these issues, or other financial or tax situations.  Call anytime.

Are You Married?

Today the IRS released the ruling on “Same-Sex Marriage,” or as we like to call it around here, “Marriage.”   LGBT families & financial professionals have been waiting for months to see what IRS will do with the Supreme Court’s June decision in Windsor v. U.S., the so-called DOMA decision.

They said “…same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes.”   Unlike the Social Security Administration, which is so far holding to its Domicile rule, this would include both marriages where you formerly lived, and vacation marriages in the U.S., Canada, or elsewhere.   However, it does not include civil unions, registered domestic partnerships or similar state-recognized relationships.  (More information here:  tinyurl.com/IRS-Marriage)

So, if you are legally married, let me be the first to congratulate you on IRS’ (belated) recognition!  And you need to contact your tax & financial advisors immediately to discuss the implications.   You will be required to file a 2013 federal income tax return as “Married” – either jointly or separately.  Some of you will save taxes.  Many of you will pay more, and you need to correct your withholding now to avoid an unpleasant April surprise.

Also, you will have the opportunity to amend returns back to 2010 (or perhaps 2009 if you contact me immediately), if the change to married status will result in a refund.

Of course, barring some unlikely event in the next few months, your marital status in Ohio, Kentucky, or Indiana will not change, so planning is multi-tiered.

This is a huge planning opportunity – for good or ill!  Feel free to share this message with your friends, who may need professional preparation & planning advice now more than ever.

As always, contact me at 1TaxFinancial anytime via email or phone with your tax & financial questions and concerns.