Online Advisor - June 2005
What's New in Taxes
IRS Certifies Hybrid Cars For $2,000 Tax Deduction
If you're planning to purchase a new car this year, be aware that buying a clean-fuel vehicle could give you a tax deduction of up to $2,000.
Among the vehicles the IRS recently certified for the deduction are the 2005 models of the Honda Insight, Honda Civic Hybrid, Honda Accord Hybrid, Ford Escape Hybrid, and Toyota Prius. The 2006 Lexus RX 400h was also certified for the deduction.
You must be the car's original owner, and you're allowed this deduction even if you don't itemize deductions on your return.
Wedding Bells Bring Tax Concerns
June is the traditional month for weddings. We associate marriage with love, roses, and wedding cake. But if you're walking down the aisle this summer, don't wait too long after the wedding to spend a little time on tax matters. Here's a checklist of things to consider:
* If you've taken your spouse's last name or hyphenated your last name, you need to notify the Social Security Administration. The agency will link your new name to your social security number and issue a new social security card.
* If you move to a new home, send a change of address to the IRS, the financial institutions where you've had accounts this year, and current-year employers. Then your W-2s, year-end tax forms, and IRS notices will find their way to you.
* Your marital status for tax filing is determined by your status on the last day of the year. Calculate the impact of the marriage penalty to see whether you need to change your income tax withholding. File a new Form W-4 with your employer's payroll department to notify them of your name change and any withholding change.
Update your will and other estate planning documents. Don't forget to review the beneficiaries on your IRAs, 401(k) plan, and life insurance policies. You'll want to make sure your documents are updated and taxes are minimized in the event of your disability or death.
Many of these suggestions don't apply just to marriage. Divorce and the birth of a child are similar major life events that will affect your taxes. For assistance with your tax planning relating to any of these events, give us a call.
What's New in Financial Strategies
Flexible Spending Account "Use It Or Lose It" Rule Changes
Flexible spending accounts (FSAs) let workers set aside pre-tax dollars to pay for medical expenses and child care costs. The rule, up until now, has been that any money left in these accounts at the end of the year was forfeited - a "use it or lose it" rule that could leave employees with planning headaches in trying to match actual expenses for the year with set-aside funds.
Now the IRS is making things a bit easier for those with FSAs. In a new ruling, the IRS is letting employers modify their FSAs to extend the reimbursement deadline for a given year by two-and-a-half months. So if your employer changes the company's plan to allow for this grace period, you should be able to avoid the end of year scramble to use up remaining dollars in your flexible spending account.
Attorney’s Advice -- No Charge
A corporate attorney sent the following out to the employees in his company.
1. The next time you order checks have only your initials (instead of first name) and last name put on them. If someone takes your checkbook, they will not know if you sign your checks with just your initials or your first name, but your bank will know how you sign your checks.
2. Do not sign the back of your credit cards. Instead, put "PHOTO ID REQUIRED".
3. When you are writing checks to pay on your credit card accounts, DO NOT put the complete account number on the "For" line. Instead, just put the last four numbers. The credit card company knows the rest of the number, and anyone who might be handling your check as it passes through all the check processing channels won't have access to it.
4. Put your work phone # on your checks instead of your home phone. If you have a PO Box, use that instead of your home address. If you do not have a PO Box, use your work address. Never have your SS# printed on your checks. You can add it if it is necessary. But if you have it printed, anyone can get it.
5. Place the contents of your wallet on a photocopy machine. Do both sides of each license, credit card, etc. You will know what you had in your wallet and all of the account numbers and phone numbers to call and cancel. Keep the photocopy in a safe place. I also carry a photocopy of my passport when I travel either here or abroad. We've all heard horror stories about fraud that's committed on us in stealing a name, address, Social Security number, credit cards.
Unfortunately I, an attorney, have firsthand knowledge because my wallet was stolen last month. Within a week, the thieve(s) ordered an expensive monthly cell phone package, applied for a VISA credit card, had a credit line approved to buy a Gateway computer, received a PIN number from DMV to change my driving record information online, and more. But here's some critical information to limit the damage in case this happens to you or someone you know:
1. We have been told we should cancel our credit cards immediately. But the key is having the toll free numbers and your card numbers handy so you know whom to call. Keep those where you can find them.
2. File a police report immediately in the jurisdiction where your credit cards, etc., were stolen. This proves to credit providers you were diligent, and this is a first step toward an investigation (if there ever is one).
But here's what is perhaps most important of all: (I never even thought to do this.)
3. Call the 3 national credit reporting organizations immediately to place a fraud alert on your name and Social Security number. I had never heard of doing that until advised by a bank that called to tell me an application for credit was made over the Internet in my name. The alert means any company that checks your credit knows your information was stolen, and they have to contact you by phone to authorize new credit.
By the time I was advised to do this, almost two weeks after the theft, all the damage had been done. There are records of all the credit checks initiated by the thieves' purchases, none of which I knew about before placing the alert. Since then, no additional damage has been done, and the thieves threw my wallet away this weekend (someone turned it in). It seems to have stopped them dead in their tracks.
Now, here are the numbers you always need to contact about your wallet, etc., has been stolen:
1.) Social Security Administration (fraud line): 1-800-269-0271
2.) Equifax: 1-800-525-6285
3.) Experian (formerly TRW): 1-888-397-3742
4.) Trans
We pass along jokes on the Internet. We pass along just about everything. But if you are willing to pass this information along, it could really help someone that you care about.
Chuckle of the Month
"If you can smile when things go wrong, then you have someone in mind to blame."
- Anonymous
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The information contained in this newsletter is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in ONLINE ADVISOR, or for assistance with any of your tax, business, or financial strategy concerns, contact our office.