Email Hack Attack? Be Sure to Notify Brokerage Firms and Other Financial Institutions

I am unable to accept trade instructions by voicemail or email.  I need to receive written instructions or talk to you directly.  Here’s a reason why…..

Anyone who has experienced an email account intrusion or “hacking” knows how frustrating it can be to deal with the aftermath—from telling friends in milder cases that you didn’t send the flurry of bogus emails they received to regaining access to a blocked account. In the most serious cases, a compromised email account can lead not only to identity theft, but also to theft of your money. That’s why one of the most important first steps you should take if your email account has been hacked is to notify your brokerage firm and other financial institutions.

FINRA has received an increasing number of reports involving investor funds being stolen by fraudsters who first gain access to the investor’s email account and then email instructions to the firm to transfer money out of the brokerage account. In addition to issuing a Regulatory Notice to firms, FINRA is issuing this Alert to warn investors about the potential financial consequences of a compromised email account and to provide tips for safeguarding your assets.

Source:  FINRA Investor Alert

IRS Reminds Parents of Ten Tax Benefits

Your kids can be helpful at tax time. That doesn’t mean they’ll sort your tax receipts or refill your coffee, but those charming children may help you qualify for some valuable tax benefits. Here are 10 things the IRS wants parents to consider when filing their taxes this year.

1. Dependents In most cases, a child can be claimed as a dependent in the year they were born. For more information see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.

2. Child Tax Credit You may be able to take this credit for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. For more information see IRS Publication 972, Child Tax Credit.

3. Child and Dependent Care Credit You may be able to claim this credit if you pay someone to care for your child or children under age 13 so that you can work or look for work. See IRS Publication 503, Child and Dependent Care Expenses.

4. Earned Income Tax Credit The EITC is a tax benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund. IRS Publication 596, Earned Income Credit, has more details.

5. Adoption Credit You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. If you claim the adoption credit, you must file a paper tax return with required adoption-related documents.  For details, see the instructions for IRS Form 8839, Qualified Adoption Expenses.

6. Children with earned income If your child has income earned from working, they may be required to file a tax return. For more information, see IRS Publication 501.

7. Children with investment income Under certain circumstances a child’s investment income may be taxed at their parent’s tax rate. For more information, see IRS Publication 929, Tax Rules for Children and Dependents.

8. Higher education credits Education tax credits can help offset the costs of higher education. The American Opportunity and the Lifetime Learning Credits are education credits that can reduce your federal income tax dollar-for-dollar. See IRS Publication 970, Tax Benefits for Education, for details.

9. Student loan interest You may be able to deduct interest paid on a qualified student loan, even if you do not itemize your deductions. For more information, see IRS Publication 970.

10. Self-employed health insurance deduction If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage for any child of yours who was under age 27 at the end of the year, even if the child was not your dependent. For more information, see the IRS website.

Forms and publications on these topics are available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Source:  IRS Tax Tip 2012-15

dineLA Restaurant Week

What is dineLA Restaurant Week?

dineLA Restaurant Week is a two-week dining event established to introduce diners to the vast array of restaurants in neighborhoods throughout LA County. Local foodies and visitors to LA will have the opportunity to enjoy a selection of specially priced three-course meals from some of LA’s best restaurants during this dining event.

When is dineLA Restaurant Week?

dineLA Restaurant Week takes place over two consecutive weeks, excluding the Saturday between: January 22–27 and January 29–February 3, 2012.

What are restaurants offering during dineLA Restaurant Week?

Participating restaurants will opt into one of three dining categories and present a specially priced three-course meal for lunch and/or dinner. Diners will be able to choose from three choices for each course including appetizer, entrée and dessert. These dineLA Restaurant Week menus will be viewable online at dineLARestaurantWeek.com. Prices and meal periods vary by restaurant and exclude beverages, tax and gratuity.

Lunches

Deluxe Dining: $16*
Premier Dining: $22*
Fine Dining: $28*

Dinners

Deluxe Dining: $26*
Premier Dining: $34*
Fine Dining: $44*

*Prices and meal periods vary by restaurant and exclude beverages, tax and gratuity

How the Financially Disorganized Can Budget and Save

While financial experts often recommend tracking expenses to rein in unbridled spending, it is possible to build a nest egg without detailing every penny spent.

“Most wealth accumulators do not budget, me included, at least in the traditional sense,” says Kahler Financial Group President Rick Kahler. “Here is what they do: Out of every dollar, they take out their taxes, then they take out 10 to 20 percent for investing, then 10 to 20 percent for emergency savings, and finally 5 to 10 percent [to give away] and they live on the rest.”

“You can see that most successful wealth builders learn to live on one-third to one-half of what they make, but they don’t have a ‘budget.’ Doing this type of ‘budgeting’ you get to spend everything in the checkbook. There are no envelopes or categorical constraints, as everything that’s important was taken off the top,” adds Kahler.

The simple strategy, he says, is to remove everything of importance — taxes, insurance, car and house payments, vacation and emergency savings, retirement funds — from the paycheck before it hits the bank.

One way to accomplish this is to have the paycheck deposited into a master account where all payments are automatically debited. One of those payments can be a “what’s left” amount that goes into a second checking account for lifestyle expenses, Kahler says.

Source:  Dinah Wisenberg Brin, Special to CNBC.com

Offshore Voluntary Disclosure Program Reopens

The IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. The third offshore program comes as the IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion.  This program will be open for an indefinite period until otherwise announced.

The program is similar to the 2011 program in many ways, but with a few key differences. Unlike last year, there is no set deadline for people to apply.  However, the terms of the program could change at any time going forward.  For example, the IRS may increase penalties in the program for all or some taxpayers or defined classes of taxpayers – or decide to end the program entirely at any point.

The overall penalty structure for the new program is the same for 2011, except for taxpayers in the highest penalty category.

For the new program, the penalty framework requires individuals to pay a penalty of 27.5 percent of the highest aggregate balance in foreign bank accounts/entities or value of foreign assets during the eight full tax years prior to the disclosure. That is up from 25 percent in the 2011 program. Some taxpayers will be eligible for 5 or 12.5 percent penalties; these remain the same in the new program as in 2011.

Participants must file all original and amended tax returns and include payment for back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties.

Participants face a 27.5 percent penalty, but taxpayers in limited situations can qualify for a 5 percent penalty. Smaller offshore accounts will face a 12.5 percent penalty. People whose offshore accounts or assets did not surpass $75,000 in any calendar year covered by the new OVDP will qualify for this lower rate. As under the prior programs, taxpayers who feel that the penalty is disproportionate may opt instead to be examined.

The IRS recognizes that its success in offshore enforcement and in the disclosure programs has raised awareness related to tax filing obligations.  This includes awareness by dual citizens and others who may be delinquent in filing, but owe no U.S. tax.  The IRS is currently developing procedures by which these taxpayers may come into compliance with U.S. tax law. The IRS is also committed to educating all taxpayers so that they understand their U.S. tax responsibilities.

More details will be available within the next month on IRS.gov. In addition, the IRS will be updating key Frequently Asked Questions and providing additional specifics on the offshore program.

Source: IR-2012-5, Jan. 9, 2012

6 Tips for the Infrequent Flyer

1. Most Checked-Bags are No Longer Free

Believe it or not, some people still don’t know that most checked-bags aren’t free. In fact, for families, these fees – which can cost as much as $70 round-trip for a second checked-bag – can be staggering.

What to do: Two airlines still offer this service at no charge – JetBlue gives you one free checked-bag, while Southwest gives you two. Another important note: Spirit Airlines not only charges for checked-bags – it is also the only airline to charge you for a carry-on bag.

See the U.S. Airline Fee Chart

2. The Best Seats on a Plane May Cost You

More and more airlines are setting aside their “best seats” for elite miles members or for those who pay to sit in these best locations (and this can sometimes include aisle and window seats).

What to do: If you’re not a miles member, sign up! And if you cannot choose your seat when you book your flight – sometimes you can, sometimes you can’t – be sure to do so at the earliest time you are allowed to check-in which is typically 24 hours before departure.

How to Get More Legroom on Your Next Flight

3. Refunds are Rare

Most of the cheapest airline tickets are non-refundable, and that means if you decide to skip your trip or make changes to your itinerary, you will pay a hefty change fee – as much as $150 per ticket – as well as any difference in airfare. In most cases, you will not get your money back simply because you decide not to fly.

What to do: You can pay more for a refundable ticket, or investigate the cost of travel insurance but make sure it covers what you need it to cover. If there’s a serious emergency that precludes you from flying, contact the airline directly and see if they can work with you.

4. Bad Weather Delays/Cancelations and Hotels/Food

This will surprise some travelers but when flights are canceled due to bad weather, the airlines typically will not give you a voucher for free food and a free hotel room. Bad weather is considered a force majeure event and therefore not the airlines’ fault, so you’re on your own.

What to Do When Bad Weather Cancels or Delays Your Flight

What to do: Be polite and try to work with the gate agent. Sometimes they have hotel vouchers for problems that are their fault and you might be lucky to snag one, but don’t count on it. Check with local hotels and see if they can offer any discounts.

5. Leave Time for Connecting Flights (Especially International Destinations)

Airlines typically list suggested airport arrival times on their websites, and for international flights this can be up to three hours. Sometimes they even require your presence at the gate for a certain period of time before departure, and this is important because planes can and do leave early. If you’re not at the gate by the specific time, your plane may leave without you.

What to do: Find out when you must be at the gate, and be there. If planning a flight that will take you to one airport where you will then fly to an international destination – say, from Kansas City to JFK then on to London – give yourself several hours to make that international flight connection. I like to give myself a full day in my international departure city in case of delays.

6. No More Free Meals in Coach

You probably already know that if you want a sandwich in coach, you’ll have to pay for it. I hope you also know to bring a credit card, because no U.S. airline accepts cash anymore.

What to do: Pack your own lunch. It’ll be tastier than anything the airlines sell you, and cheaper.

Source:  Rick Seaney, FareCompare

Payroll Tax Cut Temporarily Extended into 2012

WASHINGTON — Nearly 160 million workers will benefit from the extension of the reduced payroll tax rate that has been in effect for 2011. The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid through Feb. 29, 2012. This reduced Social Security withholding will have no effect on employees’ future Social Security benefits.

Employers should implement the new payroll tax rate as soon as possible in 2012 but not later than Jan. 31, 2012. For any Social Security tax over-withheld during January, employers should make an offsetting adjustment in workers’ pay as soon as possible but not later than March 31, 2012.

Employers and payroll companies will handle the withholding changes, so workers should not need to take any additional action.

Under the terms negotiated by Congress, the law also includes a new “recapture” provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 2012 is $110,100, and $18,350 represents two months of the full-year  amount). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2 percent of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100).

This additional recapture tax is an add-on to income tax liability that the employee would otherwise pay for 2012 and is not subject to reduction by credits or deductions.  The recapture tax would be payable in 2013 when the employee files his or her income tax return for the 2012 tax year. With the possibility of a full-year extension of the payroll tax cut being discussed for 2012, the IRS will closely monitor the situation in case future legislation changes the recapture provision.

The IRS will issue additional guidance as needed to implement the provisions of this new two-month extension, including revised employment tax forms and instructions and information for employees who may be subject to the new “recapture” provision.  For most employers, the quarterly employment tax return for the quarter ending March 31, 2012 is due April 30, 2012.

Source:  IRS IR-2011-124

Six Year-End Tips to Reduce 2011 Taxes

The IRS wants to remind all taxpayers that with the New Year fast approaching, there is still time for you to take steps that can lower your 2011 taxes. However, you usually need to take action no later than Dec. 31 in order to claim certain tax benefits.

Here are six tax-saving tips for you to consider before the calendar turns to 2012:

1. Make Charitable Contributions – If you itemize deductions, your donations must be made to qualified charities no later than Dec. 31 to be deductible for 2011. You must have a canceled check, a bank statement, credit card statement or a written statement from the charity, showing the name of the charity and the date and amount of the contribution for all cash donations. Donations charged to a credit card by Dec. 31 are deductible for 2011, even if the bill isn’t paid until 2012. If you donate clothing or household items, they must be in good used condition or better to be deductible.

2. Install Energy-Efficient Home Improvements – You still have time this year to make energy-saving and green-energy home improvements and qualify for either of two home energy credits. Installing energy efficient improvements such as insulation, new windows and water heaters to your main home can provide up to $500 in tax savings. Homeowners going green should also check out the Residential Energy Efficient Property Credit, designed to spur investment in alternative energy equipment. The credit equals 30 percent of the cost of qualifying solar, wind, geothermal, or heat pump property. For details see Special Edition Tax Tip 2011-08, Home Energy Credits Still Available for 2011 on the IRS.gov website.

3. Consider a Portfolio Adjustment – Check your investments for gains and losses and consider sales by Dec. 31. You may normally deduct capital losses up to the amount of capital gains, plus $3,000 from other income. If your net capital losses are more than $3,000, the excess can be carried forward and deducted in future years.

4. Contribute the Maximum to Retirement Accounts – Elective deferrals you make to employer-sponsored 401(k) plans or similar workplace retirement programs for 2011 must be made by Dec. 31. However, you have until April 17, 2012, to set up a new IRA or add money to an existing IRA and still have it count for 2011. You normally can contribute up to $5,000 to a traditional or Roth IRA, and up to $6,000 if age 50 or over. The Saver’s Credit, also known as the Retirement Savings Contribution Credit, is also available to low- and moderate-income workers who voluntarily contribute to an IRA or workplace retirement plan. The maximum Saver’s Credit is $1,000, and $2,000 for married couples, but the amount allowed could be reduced or eliminated for some taxpayers in part because of the impact of other deductions and credits.

5. Make a Qualified Charitable Distribution – If you are age 70½ or over, the qualified charitable distribution (QCD) allows you to make a distribution paid directly from your individual retirement account to a qualified charity, and exclude the amount from gross income. The maximum annual exclusion for QCDs is $100,000. The excluded amount can be used to satisfy any required minimum distributions that the individual must otherwise receive from their IRAs in 2011. This benefit is available even if you do not itemize deductions.

6. Don’t Overlook the Small Business Health Care Tax Credit – If you are a small employer who pays at least half of your employee health insurance premiums, you may qualify for a tax credit of up to 35 percent of the premiums paid. An employer with fewer than 25 full-time employees who pays an average wage of less than $50,000 a year may qualify. For more information see the Small Business Health Care Tax Credit page on IRS.gov.

And here is one final tip to remember: you should always save receipts and records related to your taxes. Good recordkeeping is a must because you need records to prepare your tax return, and it will help you to file quickly and accurately next year.

For more year-end tax information and to access all IRS forms and publications, visit the IRS website at http://www.irs.gov.

Links:                                                                                                 

• Publication 526, Charitable Contributions
• Special Edition Tax Tip 2011-08, Home Energy Credits Still Available for 2011
• Publication 590, Individual Retirement Arrangements (IRAs)
• Publication 550, Investment Income and Expenses
• Retirement Topics, 401(k) and Profit-Sharing Plan Contribution Limits
• Small Business Health Care Tax Credit for Small Employers

YouTube Videos:

Year-End Tax Tips – December 2011 English | Spanish | ASL

Source:  IRS Special Edition Tax Tip 2011-09

Estate Tax, Gift Tax, Generation Skipping Tax Exemption for 2012

The IRS recently published a chart for the exemptions for the above named taxes for the year 2012.

According to the legislation that was passed on December 17, 2010 the exemption was scheduled to be $5 million per person.  However, the new IRS chart shows the exemption indexed.  Hence, the amount shows as $5,120,000 per person.  Remember this exemption amount is scheduled to expire on December 31, 2012 and return to $1 million per person with the tax rate going from the current 35% to 55% (unless Congress acts).

There are only two ways to lock in the 2012 exemption amount:

1)                  Die in 2012.

2)                  Plan now.

I can help with option #2.

Source:  IRS

2012 Planning Issue: Social Security Payroll Taxes

Unless Congress takes action social security payroll taxes will go up on January 1st.

As part of the American Jobs Act, President Obama has asked Congress to extend and expand a payroll tax cut that will allow working families to bring home more money.

Right now, workers contribute 4.2 percent of their wages to Social Security. The normal rate is 6.2 percent, and if Congress takes no action, that’s what we’ll pay in 2012.

President Obama has proposed cutting the rate further — down to 3.1 percent.

For households earning $80,000 per year, the American Jobs Act would cut taxes by about $2,500.

Here’s a calculator to find out how this affects your payroll taxes:
http://www.whitehouse.gov/files/jobscalc/index.html

And, here’s a video of Brian Deese, the Deputy Director of the National Economic Council, explaining the payroll tax cut:

Bottom line:  If the tax cut is not extended then you will have 2% of your gross income less in 2012 then in 2011.  If the tax cut is extended AND the rate is cut down further to 3.1% (from 4.2%) then you will have an additional 1.1% of your gross in 2012.

Example:  You earn $100,000 gross income in 2011 and 2012.  If the tax cut is not extended then you will pay $2,000 more in payroll taxes in 2012 than in 2011.  If the tax cut is just extended then you will pay the same amount in payroll taxes in 2012 as in 2011.  If the tax cut is extended AND the rate is cut down further then you will pay $1,100 less in payroll taxes in 2012 than in 2011.

So keep an eye on this legislation and plan accordingly!