Janell A. Israel & Associates
1585 Kapiolani Blvd., Suite 1604, Honolulu, Hawaii 96814 Phone: 808-942-8817
October 2016 Tax Newsletter
What's New in Taxes:
Signs Of A Charity Scam
These days, charities and fundraisers (groups that solicit funds on behalf of organizations) use the phone, faceto-face contact, email, the internet (including social networking sites), and mobile devices to solicit and obtain donations. Naturally, scammers use these same methods to take advantage of your goodwill. Regardless of how they reach you, avoid any charity or fundraiser that:
· Refuses to provide detailed information about its identity, mission, costs, and how the donation will be used.
· Won’t provide proof that a contribution is tax deductible.
· Uses a name that closely resembles that of a better-known, reputable organization.
· Thanks you for a pledge you don’t remember making.
· Uses high-pressure tactics like trying to get you to donate immediately, without giving you time to think about it and do your research.
· Asks for donations in cash or asks you to wire money.
· Offers to send a courier or overnight delivery service to collect the donation immediately.
· Guarantees sweepstakes winnings in exchange for a contribution. By law, you never have to give a donation to be eligible to win a sweepstakes.
Charities and The Do Not Call Registry
The National Do Not Call Registry gives you a way to reduce telemarketing calls, but it exempts charities and political groups. However, if a fundraiser is calling on behalf of a charity, you may ask not to get any more calls from, or on behalf of, that specific charity. If those calls continue, the fundraiser may be subject to a fine.
Report Charity Scams
If you think you’ve been the victim of a charity scam or if a fundraiser has violated Do Not Call rules, file a complaint with the Federal Trade Commission. Your complaints can help detect patterns of wrong-doing and lead to investigations and prosecutions.
When donations aren’t deductible:
While it’s very low on your consideration list after a national tragedy, not every donation to help victims is tax deductible.
Among the rules for charitable giving is that itemized donations only can be claimed if they’re made to organizations that receive 501(c)(3) tax-exempt status from the IRS. The Internal Revenue Code specifically disallows a tax deduction for gifts to individuals.
That means if you give to a fund created to help an individual, it might help that person and his or her family, but you get no tax benefit for your gift. It doesn’t matter how valid, trustworthy
and worthwhile the effort for the needy person(s).
If you still want to give to such an assistance effort and are satisfied that a fund created for the benefit of a single person (or his or her family) is worthwhile, great.
But, just to be sure, do not give money directly to the person soliciting your financial aid. Make sure that your gift goes into a bank account established for the folks who need it.
Take the following precautions to make sure your donation benefits the people and organizations you want to help.
· Ask for detailed information about the charity, including name, address, and telephone number.
· Get the exact name of the organization and do some research. Searching the name of the organization online—especially with the word “complaint(s)” or “scam”—is one way to learn about its reputation.
· Call the charity. Find out if the organization is aware of the solicitation and has authorized the use of its name. The organization’s development staff should be able to help you.
· Find out if the charity or fundraiser must be registered in your state by contacting the National Association of State Charity Officials.
· Check if the charity is trustworthy by contacting the Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar.
· Keep a record of your donations.
· Visit the Internal Revenue Service (IRS) webpage to find out which organizations are eligible to receive tax deductible contributions.
· Know the difference between “tax exempt” and “tax deductible.” Tax exempt means the organization doesn’t have to pay taxes. Tax deductible means you can deduct your contribution on your federal income tax return.
· Never send cash donations. For security and tax purposes, it’s best to pay by check—made payable to the charity—or by credit card.
· Never wire money to someone claiming to be a charity. Scammers often request donations to be wired because wiring money is like sending cash: once you send it, you can’t get it back.
· Do not provide your credit or check card number, bank account number or any personal information until you’ve thoroughly researched the charity.
· Be wary of charities that spring up too suddenly in response to current events and natural disasters. Even if they are legitimate, they probably don’t have the infrastructure to get the donations to the affected area or people.
· If a donation request comes from a group claiming to help your local community (for example, local police or firefighters), ask the local agency if they have heard of the group and are getting financial support.
· What about texting? If you text to donate, the charge will show up on your mobile phone bill. Ifyou’ve asked your mobile phone provider to block premium text messages—texts that cost extra—then you won’t be able to donate this way.
Get Ready For Year-end Tax Planning
October 17 is the final extended deadline for filing your 2015 federal individual income tax return. Before you set aside last year's paperwork, give some thought to what you can do to reduce this year's bill. Even though December 31 is still three months away, some tax strategies take time to implement. For example, if you're close to the threshold for deducting medical expenses, you may want to schedule routine doctor visits before December 31. Another consideration is the balance in your health flexible spending account. Does your employer provide a grace period or the option to carryover up to $500 of your account balance? If not, you'll want to make sure you spend the money on legitimate health care items before year-end. Otherwise you forfeit what's left in your account.
Health Accounts - What Are The Differences?
Understanding the differences between a health savings account (HSA) and a health care flexible spending account (FSA) can help you choose which option is best suited for you. Here's an overview.
How to establish a plan. An FSA is generally established under an employer's cafeteria plan. You can set aside a portion of your salary on a pre-tax basis to pay out-of-pocket medical expenses.
An HSA is a combination of a high deductible health insurance plan and a savings account in which you save pre-tax dollars to pay medical expenses not covered by the insurance. "High deductible" means you pay more of your medical costs out of pocket. Generally, premiums on high-deductible plans are lower than traditional health insurance policies.
How much you can contribute. For 2016, you can contribute up to a maximum of $2,550 to an FSA.
If you are single, the 2016 HSA contribution limit is $3,350 ($6,750 for a family). You can add a catch-up contribution of $1,000 if you are over age 55.
How earnings and withdrawals work. FSAs are typically not considered actual "accounts" because your employer holds your money until you request reimbursement for qualified expenses.
HSAs are savings accounts, and the money in the account can be invested. Earnings held in the account are not included in your income.
Distributions from both accounts are tax- and penalty-free as long as you use the funds for qualified medical expenses.
What happens when you change employers. Normally, your FSA stays with your employer when you change jobs. Your HSA belongs to you, and you can take the account funds with you from job to job. That's true even if your employer makes contributions to your HSA for you.
Because you generally can't contribute to both accounts in the same year, understanding the differences can help you make a decision that best fits your circumstances. Contact us for help as you consider your benefit choices.
What's New in Finances:
Choose The Right Bank Account
The agency that insures your accounts against loss in the case of bank failures, known as the Federal Deposit Insurance Corporation (FDIC), wants to make sure you understand how to choose the bank account that's right for you. What advice does the FDIC offer? Sound practices include monitoring your accounts on a regular basis and keeping track of your balance to avoid fees. The FDIC also recommends that you read the agreement spelling out the terms of your account. Among the items to investigate: How often you can make withdrawals from a savings account, and when overdraft protection applies if your transactions exceed your balance. Contact us if you want help comparing accounts.
Mobile Banking Requires Vigilance
According to a Federal Reserve Board study, over the course of a year, 43% of mobile phone owners with a bank account used mobile banking. Of smart phone owners, 53% used mobile banking. At the same time, 24% of all mobile phone users believed personal information was "somewhat unsafe" when using mobile banking. If you're one of them, you understand that no system is perfect, and you're wise to be vigilant. How can you protect yourself against mobile banking fraud? Here are tips.
Secure your device. Don't provide an opportunity for thieves. Aside from physical safeguards to keep your phone or tablet safe, use password protection that prevents access to the device itself. Customize your privacy preferences and set your keypad to lock when you're not using your phone. Consider restricting location-tracking apps.
Beware of bogus apps. Before downloading and installing a banking application to your smart phone, make sure it's genuine. Confirm that the developer's name matches the name of your financial institution. Beware of unauthorized third party applications.
Make use of defensive measures. Update and use your anti-virus software. Install a security app so you can locate, disable, and erase a phone that's stolen. Make secure backups of your phone's data to online storage or your home computer.
Protect your logins. Don't share user IDs, passwords, or banking account numbers. Keep such information in a secure place. Don't respond to text messages or emails asking you to provide or confirm confidential data.
Monitor your accounts. Review all mobile banking transactions on a regular basis to detect suspicious activity. If something seems amiss, give your financial institution a call. And if your smartphone is lost or stolen, have the device's number removed from your mobile banking profile.
All information is believed to be from reliable sources, however we make no representation as to its completeness or accuracy. The information contained in this newsletter is provided by Mostad & Christensen, Inc. The information 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 this newsletter, or for assistance with any of your tax, business or financial strategy concerns, contact our office.
Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Mosted &Christensen, Janell Israel& Associates and NPC are separate and unrelated companies. NPC does not provide tax or legal advice.
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