Tax & Other Topics
From the IRS -- tax scams to avoid this summer
- Phishing: scam artists try to obtain personal information by posing as the IRS with a refund notice or similar tactic. The IRS NEVER initiates unsolicited e-mail with a taxpayer, NEVER. If one of these e-mails shows up in your mailbox, forward it to the IRS at phishing@irs.gov
- Return preparer fraud: these preparers skim part of a taxpayer's refund, charge inflated fees for tax preparation, or promise refunds that are too good to be true. Starting in January, non-CPA tax preparers will be required to register with the IRS, pass a competency exam and attend continuing education. (CPAs already have registered with the IRS and we are required to earn 120 CPE credit hours every three years, 40 hours per year.)
- Hiding income offshore: these offshore accounts include checking accounts, investment accounts, credit and debit cards, and others. The IRS continues to expand its investigations into these areas.
- Abuse of charitable donations and deductions: these are in items such as non-cash contributions to Good Will, St. Vincent de Paul, and other similar oragnizations; the taxpayer retaining control over assets donated to a tax-exempt organization; and highly overvaluing a donated asset.
Also from the IRS -- tips for record-keeping and record retention
- normally, tax records should be kept for three years--the three year period starts with the nornal due date of the return or the actual date the return was filed, whichever is later. (For 2006 returns, the due date was April 15, 2007--the three year period has passed unless the return was filed later, has not been filed, or the taxpayer is being audited.)
- reords relating to a home purchase or sale should be kept indefinitely as should records about stock purchases and sales, IRAs and other retirement plans, and business or rental property.
- the IRS does not require that records be kept in any specific format.
- records to keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payments and other documentaion that supports deductions or credits on the return.
IRS publication 552 available on line at irs.gov provides additional guidance about record-keeping.
From Liz Pulliam Weston, MSN Money, July 9, 2010 -- retirement myths
Myth No. 1 -- "I've got plenty of time." The later one starts saving in a systemmatic way for retirement, the longer retirement will be delayed.
Myth No. 2 -- "I won't live to see retirement." Chances are if you're alive now, you'll be around to age 80 or longer so death will not exempt you from retirement planning.
Myth No. 3 -- "I won't ever want to retire." You may not have a choice because of layoffs, health issues, or the need to care for a family member. Even if you love what you do, it makes sense to have a Plan B.
Myth No. 4 -- "I need to pay off my debts first." It could take years to do this and in the meantime, retirement needs are being ignored. Develop a budget that pays of debt and puts some money away for retirement. Then when the debt is paid off, switch the amount being paid on debt to retirement.
Myth No. 5 -- "I don't make enough money to save." This may be true for families living at the poverty level but some people manage to save even on small incomes. Lifestyle changes may be needed and, for sure, savings should become one of your "creditors" and a priority.
Myth No. 6 -- "Investing in the market is too scary." The stock market has been a roller coaster but in every 30-year period since 1928, stock market returns have averaged at least an 8% return. If stocks scare you, invest in a professionally-managed fund.
Myth No. 7 -- "401ks are a rip-off because of their high fees." Some plans do charge higher fees than others. Your employer could shop around for plans with lower rates. But don't avoid the 401(k) because it does offer current- and long-term tax advantages and the company match. Conventional wisdom suggests that you contribute to your 401(k) up to the maximum your company will match and invest other funds in your own tax-advantaged accounts.
And remember in literature as in life, all myths are false.
