Smartphone Users Being Not-So-Smart

One of four teenagers carries a smartphone. Many of these young users wind up broadcasting their whereabouts and other personal information to complete strangers, boosting the chances of becoming victims of identity theft (USAToday.com April 20).

A smartphone is a minicomputer holding quantities of personal information that requires protection, just like computers and laptops. Yet users–including teens–aren’t taking simple, necessary steps to protect their smartphones from thieves and hackers.

Identity fraud spiked in 2011, in part because of unsafe social media and mobile behaviors. Smartphone users are about one-third more likely than the general public to be victims of identity fraud. About 7% of smartphone owners were identity-fraud victims last year, according to “Identity Fraud Report: Social Media and Mobile Forming the New Fraud Frontier” by Javelin Strategy & Research (MarketWatch.com March 26).

In April the Federal Communications Commission and the wireless industry announced creation of a stolen smartphone database, rendering stolen devices worthless and preventing thieves from reactivating the devices on other carriers (abcnews.com April 10). The wireless carriers’ databases may be completed within six months, but it could take 18 months to complete the integrated database across all carriers.

The Identity Theft Resource Center, San Diego, Calif., recommends these best practices for mobile device users:

• Password-protect your phone. Use a strong password (numbers, upper- and lower-case letters, and symbols).

• Enroll in a backup/wiping program. This service backs up information on your smartphone to your home computer and “wipes” your phone if it’s lost or stolen.

• Install security software. Companies offer antivirus, malware, and security software designed for smartphones. Make sure you download software updates.

• Download apps from trusted sources. Some “bad apps” contain malware (short for malicious software).

• Don’t access financial accounts from free, public networks. Public Wi-Fi hotspots are a prime target for hackers who then have direct access to your mobile device.

Looking for a Job? The IRS May Owe You Money

The economy recently saw some good news on the job front: A recent jobs report paints a far sunnier picture than we’ve seen in years and led to a stock market rally. Still, the Christian Science Monitor is reporting that as many as 15 percent of Americans are still looking for work.

Even many people who currently have jobs spent some time during 2011 looking for one. If you spent 2011 looking for a job, there’s a good chance you qualify for a number of tax deductions for job seekers.

IRS Pub 529 Guidelines

The Internal Revenue Service provides some basic guidelines when it comes to tax deductions for job seekers. You should look at these guidelines before you attempt to claim any deductions related to a job search:

• Tax deductions only apply to looking for a new job in your current profession. You cannot use the tax deductions to look for a job in a different profession. Further, first-time job seekers cannot use any of the deductions.
• If you get a job through a placement agency, you may deduct the associated fees. However, if you are reimbursed by your employer for the cost of a placement agency, you must report this as regular income.
•  The IRS does not allow deductions after a “substantial break” between your last job and your current job. The IRS does not say specifically what constitutes a “substantial break,” however.
• Only amounts over 2 percent of you adjusted gross income are deductible.

Job Search Tax Deduction Options

There are a number of things you can begin adding up to reach the required 2 percent of your adjusted gross income. Income tax deductions are allowed for the following on your itemized deductions worksheet:

• Resume and Application Costs: Whether it’s printing out your resume, sending it through the mail or buying special paper to print the resume on, all of these costs are deductible.
• Travel: You can deduct a number of costs associated with travel. However, the travel must be directly related to looking for a job. This includes the mileage you put on your car during your job search as well as taking a flight and booking a hotel to look for work in another city.
• Babysitting: Do you need someone to look after your kids while you’re out job hunting? Guess what? Your babysitting fees qualify as deductions, provided that you are legitimately hiring a babysitter to look after the little ones while you look for your next job.
• Moving: If your job search lands you a gig on the other side of the country, you’re in luck: You can deduct all costs associated with your move, from packing tape to shipping. There are some stipulations, including that you must move more than 50 miles from where you currently live to qualify.
• Training and Networking: Looking for a new job can often include job training and heading off to seminars to keep your skills fresh as well as your foot in the networking pond. The cost of such events is deductible, provided that it is legitimately related to your job search.
• Phone Calls: You can deduct the cost of phone calls made from a land line or a mobile account used only for your job search. You cannot deduct the cost of phone calls made from most mobile accounts, as you buy your minutes in bulk.

Income Tax Deduction

When filing your 2011 taxes (or any other year) you should take all legally available deductions. Don’t try and play “audit roulette,” but don’t be afraid to to take every deduction you’re allowed–otherwise. you’re just sending gifts to the IRS.

Avoid Mortgage Scams

The California Department of Real Estate issued a mortgage fraud warning to consumers.

The department is advising consumers look out for mortgage relief, loan modifications, and foreclosure rescue scams perpetrated by fraudsters on financially strapped homeowners.

One prominent tactic used by scamsters and third-party operators is to ask for an up-front fee from homeowners in exchange for promised reduced monthly mortgage payments. When the fee is paid, the con artists do little or nothing for the homeowner.

It is not necessary for consumers to use third-party operators, because they may not enhance a homeowner’s ability to obtain a payment modification.  They might actually hurt their chances of working with the homeowner’s mortgage servicer, said the California Association of Realtors.

Any ads that claim to “stop foreclosure now” and offer “money-back guarantees,” should be considered with caution, the association said.

Third-party fraudsters scan foreclosure notices in public filings and the news media to locate potential victims, according to the Federal Trade Commission.

Pay Your Fines or Your Credit Score Can Suffer

Maybe you ignored a speeding ticket you got while traveling because you figured you wouldn’t be back in the area soon enough for it to matter. Or maybe you simply forgot about that pesky parking ticket you got while downtown. Whatever the situation, you’d be adding to the millions of dollars in unpaid tickets that municipalities deal with every year.

Now an increasing number of cities are trying a new tactic to get violators to pay up–and if those drivers don’t, their credit scores could take a major dent (TIME Nov. 3).

Many cities are sending unpaid traffic and parking tickets straight to collection agencies. If you continue to ignore a ticket once it’s in a collection agency’s hands, you could lose serious points from your credit score.

And a minor ticket can affect your score as much as more serious types of debt. “For scoring purposes, the credit formula doesn’t make a distinction between a $25 parking ticket you got when your meter expired and an outstanding credit card debt of $25,000,” according to the TIME article.

This could mean higher rates or flat-out rejection the next time you need an auto, mortgage, or other type of loan–even if your credit was formerly spotless.

“Someone with a 680 score could lose roughly 50 points from the addition of a collection of this nature,” said Fair Isaac Corp. spokesperson Barry Paperno in a recent Washington Post article (Oct. 31). “For someone with a 780 score–very, very good credit–the appearance of one of these collections could lower their score by as much as 105 to 125 points.”

So far, a number of large cities and their suburbs have adopted this practice. New York went this route in 2010, in an attempt to collect on $700 million in parking tickets alone. Suburbs of Washington, D.C.,  and Chicago have followed suit.

The best way to protect your credit score? Don’t write off those tickets. Even if you think you can get away with not paying them, the consequences for your credit score could be much more costly in the long run.

College Costs How Much!?

Student Choice, our private student loan provider, hosted a free financial aid webinar on May 11, 2011.  If you missed it, you can view part 1 below!  View the entire webinar in parts 1-6 on Student Choice’s YouTube page.  We will post more information and videos as they’re available, so check back often, or sign up for e-mail updates so you never miss out.

With the average gap in covering college expenses ranging from $10,000-$30,000, every bit counts.  If you need help in bridging the gap between federal funding and the cost of college, MONEY FCU can help!  Visit our student loan center for more information.

Talking to Kids About Money

Part of bringing up children today is giving them all the tools they need to survive and do well in the world and environment in which they live. In the United States of today, that means helping them understand the value of and the concepts of earning, using, saving and investing money.

Parents neglect teaching children about money for several reasons. Sometimes they don’t think it’s necessary. Sometimes they feel that, since they are not “financial experts,” they are not qualified to discuss it.

Robert T. Kiyosaki, in his bestselling book, Rich Dad, Poor Dad, gives the analogy of an agricultural society where children are not taught the basics of farming. Whether we like it or not, money is central to the lives of people in our country today. Therefore, it’s our responsibility as parents to give our children the basic understanding they need. That’s easier than you might think because, whether you realize it or not, you already have all the information that you’ll need.

As your credit union, we’d like to help you with the task of teaching your children the basics of handling money. This article is the first in a series. Follow our blog for more articles that will help you bring financial concepts to the level of a child.

Looking ahead and planning for later, not just thinking about “now,” is a sign of maturity. Explain to your children that just as an ant spends the summer putting away food for the winter, people need to put away some of the money they have now to save it for later. Saving can mean putting away a little money each week to pay for a large ticket item (bicycle, computer, CD player) or so that they will have spending money of their own to use on the family vacation.

Let your children save up for a relatively close purchase so that they can experience the pleasure of being able to buy something on their own after having controlled their urge to just spend it.

If you buy your kids everything they ask for, they will have no appreciation for money. Give them some leeway, together with guidance, in how to spend their earnings, gifts, and allowance. At the same time, know where you personally want to draw the line. What will you buy for them, and what will they have to pay for themselves?

Some children want clothes in excess of what their parents deem necessary. Others are caught up in fads, such as collections and music, and just “have to have” a new item every few days. These are areas of parental discretion and may change as the child grows older. But, whatever you do, make sure there are at least some things your child will have to pay for themselves.

When you teach your child about financial matters, do so in bite-sized pieces. Your goal should be to teach your child just enough to stimulate a genuine desire to learn more. Teach your child to “pay himself first.” by putting away part of his earnings and gifts.

Your child can open two accounts – either at home with you or at MONEY Federal Credit Union.  One can be to save for a large purchase, such as a musical instrument or equipment, and another for the faraway future. When a child accrues enough savings to purchase the object, you have taught him an important lesson: saving is really worth it. You don’t want him to resent the money that goes into savings for some nebulous, unknown future.

When your kids feel comfortable talking to you about money, you’ll have established an important bond that will grow in years to come as your child makes career and investment decisions as an adult.

Say NO To Interchange Rule

How will this new rule affect the average consumer?  Things like free checking, free debit cards, low fees and other amenities will disappear from credit unions and banks alike.  Tell the government NO to this proposed rule!

Visit http://www.stopthedebitcardrule.com for more information on how to contact your local government.

Banks Play Hide and Seek with Fees

Banks are still hiding their fees from consumers, even the fees mandated by the Truth in Savings Act, says a new study by U.S. Public Interest Research Group (U.S. PIRG). That’s why one of the study’s key recommendations is to “bank at a credit union, not a bank.”

The study found that of more than 392 bank branches surveyed in 21 states, fewer than half obeyed the law in fully disclosing their fees to prospective customers. One in four of banks surveyed provided no fee information at all, said U.S. PIRG. The group also reviewed bank fees online at 12 other banks, said its report, “Big Banks, Bigger Fees: A National Survey of Bank Fees and Fee Disclosure Policies.”

Among the key findings:

• Fewer than half (38%) of the banks complied easily with a researcher request for fee schedules required by the Truth in Savings Act. Only after two or more requests did 55% of the branches provide fee schedules. Nearly one-fourth (23%) refused to comply with the request. Other banks provided “often weighty piles of useless other brochures.”

• Free checking was available at half the banks, and 29% more offered free checking with direct deposit. “The free accounts are widely available at small and regional banks and credit unions, a finding that has also been obtained by others,” said the report.

U.S.PIRG also made these recommendations for consumers:

• Review bank statements and count the fees, especially ATM surcharges and “off-us” fees when making transactions at another bank’s ATM.

• Examine how many fees you pay and shop around. “Look for better accounts. Bank at a credit union, not at a bank. Credit unions are member-owned, lower-cost alternatives to banks and often offer the same variety of service. It’s easier to qualify for membership than most consumers think.”

U.S. PIRG, which is a non-profit, non-partisan public interest advocacy organization, also urged the Consumer Financial Protection Bureau to extend the TIS Act requirements to the Internet by requiring banks to post fees in a searchable Web format and to post the most important savings and checking disclosures required by the act in tabular format.

Choosing a Tax Preparer

What qualifications do you legally need to prepare someone’s taxes?

Unless you live in California or Oregon, none.

You read that right. Anyone can set up a desk in the local supermarket and offer tax preparation services for a fee. That’s important to know, because you don’t want to assume someone knows what they’re doing simply because they’re charging you for their services, while in reality, they could end up costing you thousands of dollars in fees, and possibly worse.

It’s a good idea to have a professional prepare your taxes, especially if you’ve gone through a life change (marriage, divorce, etc.) received an inheritance or are self-employed. However, you need to know what to look for when shopping for a tax preparer.

If it seems safe to work with one of the large tax-preparer companies consider this: many large chain-store type of places sometimes hire high school graduates who run though a questionnaire, virtually the same thing you can buy for about $50 at Staples or do on-line for even less. While a professional accountant will be more expensive, missing a deduction because you’re working with someone who wants the seasonal employment rather than a true professional can be much, much more expensive than an accountant’s fees. Before working with a large company, be sure to find out the qualifications of the person who will actually be preparing your return.

You can be sure you’re working with someone who knows what they’re doing by selecting a CPA (www.nsacct.org) or an ‘Enrolled Agent’, a federally licensed tax specialist. Since many Enrolled Agents are former IRS employees, they’re knowledgeable and competent. Find one at www.natptax.com.

If your situation is relatively simple, you can prepare your own return using one of the software programs available. If not, you might want to ask trusted friends, relatives, or coworkers if there’s a tax preparer they’ve been happy with. Nothing beats a referral from someone you know. You might want to ask the preparer what they guarantee. If there’s a mistake on the tax return, will they cover penalties, fines, and interest? Some do, but some don’t, so don’t take it for granted that you’re protected.

Also consider ‘free file’ if you’re income eligible. Check out the IRS website for details. Low and moderate income filers can qualify for the federal VITA program that offers free assistance in filing your returns, and anyone can call the IRS for help at 800-829-1040.

Keep Cost of Caring for Elderly Parents Under Control

More than 40% of caregivers spend about $5,000 each year caring for a loved one; many individuals receiving care are parents of baby boomers (USAToday.com, Feb. 28).

If you’re a caregiver, here are some ways to help cut costs that won’t compromise quality of care:

• Seek government help–Your local Area Agency on Aging can suggest programs in your state that can help with the financial burden of caregiving. Fifteen states offer a Cash & Counseling program for low-income seniors who are eligible for Medicaid. The program helps seniors pay for in-home daycare, including care that family members provide.

• Pay family members for caregiving–More than one-third of caregivers have been forced to quit jobs, take early retirement, or reduce work hours because of their caregiving commitment. Consider paying yourself or another family member out of your parent’s savings for the care you’re providing. This “salary” can help offset lost income. To avoid disputes with other family members, create a contract that outlines the terms of the agreement.

• Hire outside help–A survey by the Hartford Group, Hartford, Conn., shows that 80% of boomer caregivers feel moderate to high levels of stress associated with caregiving. Younger boomers, between 45 and 54 years old, appear to be shouldering the greatest burden; half report that they worry about the impact that caregiving has on their jobs. Hiring someone to provide some care allows you to provide better care for your parent when you’re fulfilling your caregiving role.

• Claim your parent as a dependent–You may be eligible to claim one or both of your parents as dependents, based on how much support you provide. To do this, your parent’s income, excluding Social Security, must be less than the amount of the personal exemption. For 2010, the personal exemption was $3,650; for 2011 it’s $3,700. You also must provide more than 50% of your parent’s financial support to qualify. For more information, visit irs.gov.

• Deduct your parent’s medical expenses–If you can’t claim a parent as a dependent, you might be able to deduct medical expenses. To qualify, you must provide at least 50% of your parent’s financial support; your parent doesn’t have to meet income restrictions. The deduction is limited to medical expenses that exceed 7.5% of your adjusted gross income. Qualified expenses include in-home health care, the cost of a nursing home, dental care and prescription drugs.

• Consider your own long-term care–After seeing firsthand what being a caregiver means financially and emotionally, many boomers are making arrangements for their own long-term care. Paying for long-term care insurance policies isn’t easy for families that also are saving for retirement and children’s college expenses. About 20 million middle-age Americans are stuck between conflicting sets of responsibilities, according to stltoday.com: caring for their own kids–and their parents. You also can start preparing for your own long-term care, without draining your money, by drawing up a living will and a health-care proxy.