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The Top Three Ways to Stop CyberCriminals

Computer crime concept.

FREEZE YOUR CREDIT

Place a security freeze on all your accounts with the three major credit reporting agencies.  It is the best way to stop ID thieves from opening new accounts in your name.

MONITOR YOUR ACCOUNTS

Register for online access to every financial account you have (bank accounts, credit cards, 401k’s, IRA’s, etc.  Then check each one weekly.  Consider setting up alerts on your major accounts so that any time there is activity, you are sent a text message.  Most companies will do this for free and allow you to set a dollar threshold.  You can set them as low as zero.

USE A PASSWORD MANAGER

This digital services store all your passwords in a secure online vault.  You will never lose a password again.  They generate complex hard to hack passwords for each of your accounts.  They will notify you of data breaches at companies you have accounts with.  That allows you to quickly change the password for that account, protecting your information.

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12 IMPORTANT THINGS TO KNOW ABOUT SOCIAL SECURITY

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  1. SOCIAL SECURITY IS NOT GOING BANKRUPT

Social Security trust funds are near an all-time high.  The Trust Fund Reserves are worth about $2.89 trillion today.  As more boomers retire, the ratio of workers to Social Security recipients is changing.  The program will need to dip into its reserves to pay full benefits from now on.  It is now forecast that the trust fund reserves could be exhausted in 2034.  Social Security still won’t be bankrupt.  The program will then pay benefits at a rate of 79 percent of what recipients expected to receive.  The goal is to keep benefits at their current level.

  1. CONGRESS PROBABLY WILL NOT TAKE UP SOCIAL SECURITY REFORM ANYTIME SOON

Control of Congress after the 2018 elections will play a key role in how Social Security’s funding is addressed.  Since Social Security is so important, we need to be really thoughtful and deliberate about how to make a change.  Bipartisan support will be required for Congress to make any effort to reform Social Security.

  1. SOME IDEAS TO REFORM FUNDING ARE STARTING UP

One proposal is to either raise or eliminate the wage cap on how much income is subject to the Social Security payroll tax.  The cap for 2019 is $132,900.  Other options are either raising the percentage rate of the payroll tax or raising the age for full retirement benefits.

  1. LAWMAKERS DO NOT RAID THE TRUST FUND

Money remaining after benefits are paid is invested directly into U.S. Treasury securities.  The government can use the money from those securities, but it has to pay the money back with interest.

  1. MANY BELIEVE IT CAN BE RUN BETTER

With the rapid increase in the number of retirees, the agency is struggling to keep up. Over 10,000 people are turning 65 every day.  Average wait times at field offices has increased by 32% since 2010.  Something needs to be done.

  1. YOUR SOCIAL SECURITY BENEFITS CAN BE TAXED

Single filers whose combined annual income exceeds $34,000 might pay income tax on up to 85% of their Social Security benefits; couples filing jointly may pay tax on up to 85% if their combined income tops $44,000.

  1. SOCIAL SECURITY IS NOT MEANT TO BE A RETIREE’S SOLE SOURCE OF INCOME

The SSA says the program’s retirement benefits will replace about 40 percent of your preretirement wages.  Fifty percent say their families depend on Social Security for at least half of their income.  Twenty-six percent have families trying to live on almost all of their retirement income.

  1. THE PURCHASING POWER OF SOCIAL SECURITY IS DIMINISHING

Every year, the SSA issues a cost of living adjustment (COLA) to keep up with inflation.  Medical costs for older Americans has increased faster than the COLA has adjusted.  This is another area that needs to be addressed.

  1. YOU CAN WORK AND GET SOCIAL SECURITY

The agency will withhold some of your benefits if you are under the full retirement age and your earned wages exceed a certain limit.  In 2019, the threshold on your earnings will be $17,640.  The government will temporarily withhold $1 from your benefit for every $2 earned over the cap.  Once you reach full retirement age, you can work as much as you like and your benefits won’t be reduced.

  1. SOCIAL SECURITY HAS GONE DIGITAL

The U.S. Treasury Department no longer sends paper checks in favor of electronic payments.  The SSA has an online portal called My Social Security where you can track your benefits.

  1. SOCIAL SECURITY IS NOT JUST A RETIREMENT PROGRAM

There are 4 main types of Social Security benefits:  retirement, disability, dependent and survivor.  When filing for benefits, you should make sure to ask about your eligibility for other benefits.  If someone in your family dies, you should inform SSA of the death and ask if you or other family members are now eligible for an additional survivor or dependent benefits.

  1. MOST PEOPLE GET BACK MORE THAN THEY PUT IN

Generally, married couples are more likely to get back more than they contributed than single people.  Both low-income and high-income people may receive more dollars from the program over a lifetime than the amount of money they contributed to it.

 

 

 

 

 

 

Identity Theft

Identity-Theft

Most people associate identity theft by using personal information to take over financial accounts.  To guard against fraud, review your statements and accounts for all your financial holdings regularly to confirm that transactions and balances are correct.

If you notice suspicious activity on a credit card or bank statement, contact all financial institutions where you have accounts.  Place a 90-day fraud alert on your credit reports by contacting the fraud hotlines of all three credit reporting agencies.

  • Equifax 1-888-766-0008
  • Experian 1-888-397-3742
  • Trans Union 1-800-680-7289

This fraud alert prevents identity thieves from opening new accounts in your name since most lenders need to review your credit report before approving an account.

Protect your Social Security (SSN).  Some tips are:

  • Shred any documents that contain your SSN rather than putting them in the garbage.
  • Don’t send your SSN through e-mail or text messages.
  • Be mindful of who’ in earshot when sharing private information over the phone.
  • File your tax return early to help prevent others from accessing your refund.

Did you know that cybercriminals can use your health insurance information to see a doctor, get prescription drugs or file claims to your insurance provider?  So, what’s the remedy?

  • Be sure to read all medical and insurance statements carefully. If something looks wrong, call your health insurance customer service number to check on it.
  • Keep your insurance card in a safe place. If you lose it, call your provider for a new one.
  • If you see a fraudulent claim, alert your medical providers immediately.
  • After a fraud incident is reported, follow up with insurance and medical providers to make sure that all errors have been amended.

A sharp increase in social media use means a greater risk of stolen identities and online fraud.  Be aware of what you are posting on your profile.  Your social media profile and updates may reveal answers to security questions and give hackers password hints.

Be selective when accepting social network invites.  Don’t add someone you don’t know to your social network.

Prevention  Tips

  • Watch for phishing
  • Verify virus alerts
  • Update your software
  • Beware of phone scams
  • Notify authorities

Are You Ready For The Tax Cuts And Jobs Act (TCJA)?

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Filing 2018 taxes will be the first time many Americans experience the full effects of the Tax Cuts and Jobs Act signed into law in December 2017.  The new law brings a number of changes to deductions applying to individuals for tax years 2018 through 2025.

The standard deductions nearly doubled – $12,000 for single and $24,000 for married filing jointly in 2018.  You may not need to itemize your deductions.

The itemized deduction for state and local taxes (SALT) is now limited to a maximum of $10,000.  This deduction is a combination of property tax, state and local income tax or sales tax.

Acquisition indebtedness on mortgages incurred after December 16, 2017, you can deduct the interest up to $750,000 (previously $1 million.)  Home equity loan interest deductions are suspended unless you use the money to improve the home.

Charitable donations for cash contributions increased to 60% of adjusted gross income, up from 50%.  You must itemize your deductions to claim charitable donations.

For 2018, you can claim medical and dental expenses as itemized deductions that exceed 7.5% of AGI.  In 2019 the floor for medical and dental expenses will be 10% of AGI.

Personal exemptions for 2018 to 2025 have been eliminated.

Beginning 201, the TCJA doubles the child credit to $2,000 per qualifying child under age 17.  Since this is a tax credit which reduces your tax bill dollar for dollar, this is a significant benefit.

Miscellaneous itemized deductions subject to the 2% AGI floor are eliminated.  These include unreimbursed job expenses, investment expenses, and tax preparation fees.

2018 is a tax year that will result in whether or not you get a refund.  The result may be totally different than in the past.  You may need to adjust your W-4 for next year.  Speak to your accountant.

Welcome to the Network Tax Solutions Blog

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Albert Einstein once said, “The Most Difficult Thing to do in this World is your Federal Income Tax.” This is still true in 2019.  Major tax reform that affects both individuals and businesses was enacted in December 2017.  It is called the Tax Cuts and Jobs Act (TCJA.)  The IRS estimates that we will need to create or revise more than 400 taxpayer forms, instructions and publications for filing season starting in 2019.  This is more than double the number of forms created in a typical year.

Tax Reform for Individuals include:

  1. Do a Pay checkup. Adjusting Federal Income Tax Withholding.  Do a new W-4.
  2. Credits – Child Tax Credit and Credit for other Dependents.
  3. Deductions:
  4. Personal Exemption Deduction Eliminated,
  5. Standard Deduction Amount nearly doubled.
  6. Many Itemized Deductions are Eliminated.
  7. Deduction for Home Mortgage and Home Equity Interest is modified.
  8. Limit for Cash Charitable Contributions increased from 50% to 60% of AGI.
  9. Miscellaneous Itemized Deductions are suspended.
  10. Moving Expenses are no longer deductible except for the Armed Forces.
  11. State and Local Income Tax (SALT) limited to $10,000 per the calendar year.
  12. Section 179 Depreciation increased the maximum deduction to $1 million.
  13. Alimony is no longer Deductible.
  14. AMT exemption amount increased.
  15. For 2018, most tax rates have been reduced.

As mandated by Federal Law, all tax returns prepared by this office will be electronically filed.  Both the IRS and all State Taxing Agencies require you to sign an approval form.

For new and returning clients, your returns will not be filed until we are in receipt of all necessary forms and PAYMENT of your invoice. If you have not made an appointment, please contact us ASAP. Don’t forget to bring your organizer to your tax appointment!

Thank you for choosing Network Tax Solutions, “Helping You Keep More of the Money You Make.”

Financially yours,

Esta Klatzkin, EA

Founder, Network Tax Solutions

Do You Have a Job or a Career?

 

hobby or careerMost people have jobs.  They faithfully go to work each morning, do their best to execute their duties, come home tired, and look forward to weekends and vacations.

They do this to make ends meet, hoping something better will come along.  And better things to come now and then, along with setbacks.  But the drudgery continues.  Week in. Week out.  Forty years pass.  Life has been half miserable.  But it’s time for retirement.

Retirement means getting out of job jail.  No more hated work.  It’s now time for relaxation and fun.

Just kidding!

As it turns out, retirement today is this:  After giving up a fairly well-paid full-time job, you take on several poorly paid part-time jobs (without benefits) to pay for your ever-increasing retirement expenses.

But it doesn’t have to be that way.

You can spare yourself the misery by ditching the job early on and replacing it with a career.

What’s the difference?  A career is a life’s vocation.

You work a job to make money.  You work a career to build something you value.

With a job, you are always thinking about the time you won’t be working.  With a career, you are always thinking about it even when you aren’t working.

The reason for this is a matter of focus.  A job looks inward: “I do this to make money for myself.”  A career looks outward:  “I am building  something  that others can appreciate or use.”

The litmus test for determining whether you have a job or a career is this question:  If you could afford to, would you do it for free?

You shouldn’t work for money.  You should work on having a career.

If you don’t like your work but are doing it because you have to support  yourself and/or a family, start working on a Plan B.  Plan B is titled: “Doing Something I Care About.”

Measured in mundane, day-to-day terms, having a career can be challenging since you are constantly focused on the work, and the work sometimes does not go as well as you might want.  But even when the work is frustrating, it involves you in a way that is somehow satisfying.  And when the work goes well, there’s nothing like it.

If you have a job now, can you transform it into a career?  Well, it may depend on what you are doing.

So that is the first and main thing.  But there are requirements for your work to be a career:

  • The work should be challenging. It should require the best of you – your intelligence, your intuition, your stamina, and your care.  Ideally, it should require both knowledge and skill and thus give you the opportunity to learn and improve forever.
  • It should produce things or provide services that are enjoyable and/or useful to other people. This adds a social component to the experience.
  • It should be accretive. That is, the value of the goods or services you produce should increase as your career continues.

Not everyone can make a career out of his or her job.  An architect certainly could.  Instead of designing commercial crap for the highest bidder, she could gradually develop her own style, one that she likes and that would serve people, and she could produce work over her lifetime that would endure for generations.

Think about it.  Start creating your Plan B.  Satisfaction comes from doing something you care about.  And if you can make money for 40 years doing something you care about and creating something that has value to others – you have a career!

New Tax Law Improves 529 Education Savings Plans

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One of the most daunting expenses facing many parents is paying for the cost of college or other forms of higher education.  The increase in the cost of college tuition and related expenses has significantly outpaced the broader inflation rate.  529 savings plans are one of the most effective ways to invest money to meet future education expenses.

One factor that makes 529 savings plans attractive is the tax benefits they offer.  Contributions grow tax-deferred.  When money is withdrawn from the account to pay for qualified education expenses, no federal or state taxes are due on earnings that accumulate in the plan.  529 saving plans offer flexibility in terms of the amount of money that can be invested (up to $150,000 for married couples) using advanced gifting that allow a one-time gift with no gift tax implications.

As a 529 account owner, you are always in control of the assets in the account.  This is an important benefit that helps ensure that your investment will be used as you intended.

If the intended beneficiary decides not to pursue higher education or earns a scholarship that makes your contribution unnecessary, you can designate the money for a different purpose.  Some choices are:

  • Changing the beneficiary to another family member of the original beneficiary, without penalty.
  • Using it for your own educational expenses.
  • Leaving the assets in the existing account for future use.
  • Withdrawing the assets.

Keep in mind if assets are withdrawn for a non-qualified educational purpose, earnings on these withdrawals will be subject to applicable federal and state taxes.

The new tax law enacted in December 2017 extends the scope of 529 savings plans to include K-12 private, religious and public tuition expenses.  You can now withdraw up to $10,000 per year tax-free from your 529 savings plan for each beneficiary to help cover tuition costs.

529 savings plans have long been considered a reputable investment vehicle to help pay for educational costs.  They are flexible, allow the account owner to maintain control, and offer unique giving and tax advantages.  If your goals include building up investments to help cover future education costs for your children or grandchildren, consider a 529 savings plan.