Handout
Protect yourself from phishing attacks and other efforts to wreak digital or financial havoc by implementing these recommendations on Abacus’s Identity and Digital Protection Checklist.
Stephen “Scotty” J. Scott
Article
Abacus’s client, Eloisa, was celebrating her 50th birthday on a long-planned trip to New Zealand. Out of the blue, Eloisa’s sister called with vacation-busting news. The police had found copies of Eloisa’s identity information in the hotel room of an identity theft ring. Over the following months (and now years), Eloisa fought a rear-guard action to prevent abuse of her identity: a false tax return filed for an early refund, multiple fraudulent credit cards opened in her name, and even pizzas ordered on a fraudulent credit card for delivery to a prison. Each of us falls into two categories now, those who have had an experience of identity the or those who have and just don’t know it yet.
Freezing your credit is the strongest method to protect your identity. Contact these three credit bureaus to freeze your credit: Equifax.com, Experian.com, and Transunion.com. No one can get credit in your name (including you) when you freeze your credit. You receive a four-digit PIN to unlock your credit for any necessary credit needs such as purchasing a car. Be sure to freeze your elderly parents’ and children’s credit, too.
LastPass, 1Password, Dashlane, or Roboform all store and create strong, unique passwords. These programs sync across all your technology devices: phone, computer, iPad, etc.
This process, which requires both a user ID/password and a code sent to a device such as your phone to access your information, safeguards your accounts by adding a layer of security. https://twofactorauth.org
This website highlights whether your email address or passwords have been part of a data breach or hacking event. You can sign up to receive alerts of any new breaches.
Do some spring cleaning of your unused or unwanted online accounts. https://backgroundchecks.org/justdeleteme
Enough is Enough, is a non-profit dedicated to making the internet safer for children and families. The website has excellent, timely resources for internet safety.
Periodically review your personal and your children’s social media settings.
Although tempting, resist sharing background information that might allow another individual to piece together a virtual identity with your information.
You should shred any documents that contain your personal information. You might prefer using a security stamp or roller to redact private information on these documents instead of shredding.
Complete a Google search on you and your family members. If you are uncomfortable with the amount information listed about yourself or your family, you can enroll in a service, like Reputation Defender, to remove this data from the web. The cost ranges from $10 per month up to $10,000 per year if you are an individual with a strong public presence. These services cannot eliminate information but can help manage the challenge.
Countless individuals have had their emails and other private information hacked simply by using public WiFi. Abacus recommends a virtual private network service (VPN) such as Private Internet Access or Nord VPN.
A week does not go by that Abacus doesn’t receive a call from a client seeking advice on identity the or other internet scams. Many of our recommendations have a “hassle” factor that keeps clients from implementing the strategy until it’s too late. Just as you would secure your home, take steps today to lock the door to your financial life.
Stephen “Scotty” J. Scott
Article
With the passage of the Tax Cuts and Jobs Act of 2017, the use of Qualified Charitable Distributions (QCD) from your Individual Retirement Account (IRA) remains a tax-savvy option for making charitable gifts and, for many people, is now an even more appealing choice. Making QCDs can lower your taxable income and reduce the tax due on withdrawals from your IRA, all while benefiting your favorite charity.
A QCD is a direct gift from your IRA to a qualified charity. Once you reach the age of 70.5, you can use QCDs for your charitable planning. A gift made through a QCD counts toward your annual Required Minimum Distribution (RMD). (Your RMD is taxed as ordinary income.) Reducing your RMD total by the QCD amount lowers your adjusted gross income and taxable income and, therefore, your income tax due. A QCD also provides an opportunity to leverage your charitable gift: you deposited the money into the IRA without paying taxes, the money grew tax-deferred for the time it was in the account, and the money is received by the charity as a tax-free gift.
Since a QCD from your retirement account is not included in your taxable income, you are not able to deduct the gift as a charitable contribution in your itemized deductions. Under new tax laws, the standard deduction for singles increased to $12,400 and for those married filing jointly to $24,800. Given this change, itemizing deductions will no longer be the optimal tax solution for many filers, and in turn, those who elect the standard deduction will not receive a tax benefit from charitable contributions. Individuals in this scenario will receive the maximum benefit from QCDs.
Depending upon your level of income, using a QCD to lower your taxable income can have far-reaching effects by reducing the amount of your Social Security payments subject to taxation, increasing your eligible medical expense deduction on Schedule A, or lowering your Medicare premiums.
Mapping out your goals for charitable giving and creating a plan for making those donations creates the opportunity to maximize the impact of your charitable gifts for the charity and for yourself!
Stephen E. Maggard
Article
Contributions to your account may be made with pre-tax dollars. An HSA can fund medical expenses tax free at any age, unlike a 401(k) or IRA which could incur income taxes and a penalty. Paying your medical expenses and deductibles from your HSA with pre-tax dollars which acts as a 10-40% discount depending upon your tax bracket.
Medical expenses may be paid for with tax-free distributions from your HSA. Remember to keep your receipts for medical expenses if paid out of pocket, and use these receipts to reimburse yourself from your HSA without tax penalties.
Any earnings on the funds within your HSA are tax-free, compared to other savings accounts that result in taxes on earnings.
Your HSA account belongs to you, rather than to your employer or your insurance company. The funds do not “vest” in the way other retirement accounts do—the HSA immediately belongs to you and remains with you even if you lose your health insurance or change employers.
There is no “use it or lose it” clause associated with your HSA account. Unlike a Flexible Spending Account, the funds within your HSA account do not have to be spent within the same year they are contributed. Dollars remain in the HSA until you are ready to withdraw them.
The funds within an HSA accumulate over time and can even be factored into your retirement planning. After the age of 65, you can withdraw funds from your HSA account penalty-free for any purpose. You will owe income taxes on these withdrawals if you use the dollars for non-medical expenses. Funds within an HSA used for medical expenses (such as long-term care costs) will continue to be distributed tax-free.
An HSA has a higher contribution limit than a traditional IRA. The maximum contribution for an HSA is $7,200 for a family ($3,600 for an individual), compared to an IRA which is capped at $6,000. HSA owners age 55 and older are entitled to contribute an extra $1,000 per year.
HSA plans typically have a higher deductible than other health insurance plans and charge lower premiums, which can be significant to individuals with low medical costs. Based on premium savings alone, HSA owners can save up to 40% on the cost of maintaining health insurance coverage each year.
Certain “medical expenses” are not covered by health insurance carriers but can be paid for from an HSA, such as dental, vision, and prescription drugs. Better yet, your HSA uses pre-tax dollars to pay for these expenses!
Note: As of January 1, 2011, over-the-counter drugs are no longer considered eligible medical expenses for an HSA. However, a prescription from your doctor for these over-the-counter drugs will allow you to fund these expenses from your HSA without taxes or penalties.
The funds within your HSA account do not have to be used for medical expenses after retirement. If you choose to pay your medical expenses out of pocket and allow your HSA account to grow tax-deferred until retirement, this account could potentially grow to $360,000 over 40 years (assuming a 2.5% rate of return) or to a whopping $1.1 million (assuming a 7.5% rate of return) according to a study by the Employee Benefit Research Institute (EBRI).
An HSA can be designated as an emergency fund or to supply future expenses such as an extravagant vacation. The benefits of an HSA can be both immediate and long term. Like a traditional IRA, your HSA account can be distributed to your beneficiaries if not used during your lifetime.
Article
As you sort through your mail, you may notice that some mail has arrived that is addressed to your child. For example, your ten-year-old child may have received a couple of pre-approved credit offers. This may seem a bit odd, but you shrug it off and think it must be due to the over-zealous efforts of credit card companies.
Unfortunately, this type of mail can be red flag, indicating that your child could be a potential victim of fraud. As a parent, you have the ability to protect your children against fraudsters who are seeking to use your child’s information to obtain credit for themselves. It may be time to request a credit freeze to ensure your child’s financial security. Knowing what to do will make it easier to protect your child’s future financial security.
As a parent or legal guardian, you can protect your child’s credit by placing a credit freeze. A credit freeze allows you to restrict access to your child’s credit report, which makes it more difficult for thieves to open new accounts in your child’s name.
Most children under the age of eighteen do not have credit reports. This blank slate presents an enticing opportunity for those hoping to commit fraud. Once a fraudster obtains a child’s identifying information, the thief can then use the information to apply for credit and take out loans in the child’s name. Unfortunately, the identity theft often goes unnoticed for years.
Abacus frequently assists clients with requesting their own credit freeze and their children’s credit freeze. An overview of the process is included below:
To request a credit freeze on your child’s credit, you’ll need to contact each of the three major credit bureaus: Experian, Equifax, and TransUnion. Each credit bureau will require that you send documentation verifying your identity, your child’s identity, and your relationship to your child. You will need to make three copies of each of the following documents:
In addition to the documents listed above, each credit bureau requires a form (or signed statement) requesting a freeze. Both Equifax and Experian have forms available on their websites. TransUnion does not have a form; they require a signed letter requesting a freeze.
Once you’ve gathered all the required documents, you will send a set of documents to each of the credit bureaus. Although sending by regular mail is acceptable, it is recommended that you use certified mail because of the sensitive nature of the documents.
After receiving the credit freeze requests, each of the credit bureaus will mail confirmation of the freeze and will include a PIN. The PIN will be necessary for unfreezing your child’s credit, so you will need to keep it in a safe place. The freeze will remain in place until you take action to lift the freeze (or when the child is over age sixteen and takes action to lift the freeze).
Most parents will do everything within their means to protect their children. By staying vigilant and requesting a credit freeze for your child, you are working to protect your child’s financial health.
Brittany M. Midgette
