Investment Trends, Tips and Taxation Archives - Page 2 of 3

Retirement: To Do It or Not? And When?

Shawn Glogowski on August 26, 2020

Retirement. A time in life to which we all look forward. However, According to the Bureau of Labor Statistics, in 2016, 26.8% of those between the ages of 65-75 continued to work—a number that is expected to rise to 30.6% by 2026.

There are varying reasons Americans are postponing retirement, from economic stability to personal fulfillment. Whatever the reason, and however long you might plan to remain working, there are retirement-related financial concerns that should be addressed in your sixties to ease your eventual retirement transition and avoid potential snags down the road.

Wait to File for Social Security

Just because you reach “full retirement age”(FRA)doesn’t mean you have to collect Social Security benefits, especially if you’re still working. The longer you wait, the more your benefits will increase—up to age 70.

Monthly benefits increase between six and seven percent for every year you delay from age 62 to your FRA, and then grow eight percent a year between your FRA and age 70. If you are healthy and longevity runs in your family, you stand a good chance of increasing your lifetime benefit by postponing your start date.

Enroll in Medicare Part A

If you’ve already filed for Social Security, you’ll be automatically enrolled in Medicare Part A and Part B at age 65. But if you haven’t, you have a choice to make.

Most people will benefit by enrolling in Medicare Part A at age 65 whether or not they continue to work. There are no premiums, and enrolling now will help you avoid potential penalties or delays down the road.

If you’re covered by your employer’s plan and your company has 20 or more employees, that plan will remain your primary coverage. If you work for a company with fewer than 20 employees, Medicare will be your primary insurer.

*Another caveat: Once you enroll in any portion of Medicare, you can no longer c*ontribute to a Health Savings Account. So if you’re relying on your HSA to boost your savings, you’ll need to postpone Medicare.

Consider Postponing Medicare Parts B and D

If you work for a company with fewer than 20 employees, you’re probably best off enrolling in Medicare Part B and Part D when you turn 65. But if you work for a larger company, you may well be better off sticking with your employer plan and enrolling in Medicare once you retire. This link to a Medicare.gov website provides information on costs and coverage that may help you make a decision.

Once you leave your job, you will generally have eight months to enroll in Part B or face a penalty. Part D also has a late enrollment penalty if you go more than 63 days without “creditable” prescription drug coverage. Creditable means that your existing insurance is expected to pay as much as the standard Medicare prescription drug coverage.

Continue to Save for Retirement

No one should ever walk away from an employer’s 401(k) match, but it makes sense to try and save more. The good news is that as long as you are working, you can continue to contribute the legal maximum ($26,000 in 2020) to your 401(k) regardless of age. If you anticipate being in a high tax bracket come retirement, you might want to consider a Roth 401(k), if available.

You can also contribute up to $7,000 to either a traditional or Roth IRA as long as you have earned income, although in 2020 Roth IRAs are restricted to those who earn less than $206,000 (combined income for a married couple filing a joint return) or $139,000 (single).

Note that the 2019 SECURE Act extended the age limit for contributing to a traditional IRA from age 70½ to 72.

Don’t Forget About Required Minimum Distributions

The CARES Act passed in March of 2020 has temporarily suspended all required minimum distributions (RMDs) for 2020, regardless of age. This includes 401(k)s and traditional IRAs.

Starting in 2021 when the CARES Act expires, we will revert back to the RMD rules established by the 2019 SECURE Act. If you did not turn 70 ½ by 2020, you can wait until the year in which you turn 72 to start taking your required distributions.

Also note that earning a paycheck means you can delay taking a required minimum distribution (RMD) from your 401(k). As long as you are working (and you don’t own more than 5% of the company), that requirement is waived until April 1 of the year you retire. There are also no RMDs for Roth IRAs at any age.

Think About Your Mortgage

Conventional wisdom says we should pay off our mortgages before we retire, but it’s important to look at your mortgage in the context of your complete financial profile. Before you rush to pay off your mortgage, especially if that involves selling securities or will reduce your liquidity, you should consult with your financial advisor.

Plan How to Turn Your Portfolio into Your Paycheck

Switching from saving to spending and depleting what you’ve worked so hard to build can be a difficult transition. Before you stop working:

Review your net worth statement to understand exactly where your stand.
Make a retirement budget and stash away a minimum of a year’s worth of cash.
Review your portfolio to make sure you have the appropriate balance of risk and safety.
Consult with your financial advisor to create a tax-efficient drawdown strategy.

It’s great to choose to work for as long as it’s financially and personally rewarding, but planning carefully for the eventual transition to retirement can make the next phase of life even more fulfilling.

This blog was excerpted from an online article by Carrie Schwab-Pomerantz, CFP®, Board Chair and President, Charles Schwab Foundation; Senior Vice President, Schwab Community Services, Charles Schwab & Co., Inc.; Board Chair, Schwab Charitable

401(k)? IRA? Both?

Shawn Glogowski on August 17, 2020

If you are fortunate enough to have a 401(k) or other employer-sponsored retirement plan, it can be the backbone of your retirement savings. Yet there is a good case for adding an IRA to your retirement funds as it not only provides the chance to save more, it can also offer more investment choices than in an employer-sponsored plan.

The question is, which IRA is right for you?

There are two types of IRAs: a traditional tax-deductible IRA and a Roth IRA. For 2020, the annual contribution limit for both is $6,000 with a $1,000 catch-up if you’re age 50-plus. However each IRA does have an income ceiling that will determine whether one or the other is right for you.

Traditional tax-deductible IRA—–This is a good option for someone who does not have a 401(k) or similar plan, a traditional IRA is fully tax-deductible. Upfront tax deductibility plus tax-deferred growth of earnings are two of the pluses of this type of IRA. However, if you participate in an employer sponsored retirement plan such as a 401(k), tax deductibility is phased out at certain income levels based on your Modified Adjusted Gross Income (MAGI). For tax-year 2020, the levels are $65,000-$75,000 for single filers, $104,000-$124,000 for married filing jointly.
Roth IRA—With a Roth IRA, you don’t get any upfront tax deduction, but you do get tax-free growth plus tax-free withdrawals at age 59½ as long as you’ve held the account for five years. And there’s no restriction if you participate in an employer plan. However, there are income phase-out limits based on your MAGI that determine whether you’re eligible to open and how much you can contribute to a Roth. In 2020, the limits are $124,000-$139,000 for single filers, $196,000-$206,000 for married filing jointly.

There are a couple of other things to considerwhen choosing between IRAs, the main one being whether you believe you will be in a higher or lower tax bracket when you retire.

That’s because withdrawals from a traditional IRA are taxed at ordinary income tax rates at the time of withdrawal; qualified Roth withdrawals are tax-free. Also there’s no required minimum distribution (RMD) for a Roth, but with a traditional IRA, you’ll have to begin taking an RMD at age 70½, or 72 if you were born on or after July 1, 1949.

Whether or not you choose to open an IRA, if your employer offers a Roth 401(k), you might also consider adding this to your retirement savings strategy. There are no income limits to participate in a Roth 401(k), and you can have both types of 401(k) at the same time.

Having both doesn’t mean you can contributemore than the total annual 401(k) contribution limit, but you can split your contributions between the two, giving you a combination of both taxable and tax-free withdrawals come retirement time. Making your 401(k) and IRA work together.

The goal of all this is to give you the greatest opportunity to save, with the greatest flexibility. Contribute enough to your 401(k) to capture the maximum company match, then, if you’re eligible contribute to a tax-advantaged Health Savings Account (HSA). If your 401(k) has limited investment options consider opening either a traditional or a Roth IRA and contribute the annual maximum.

Next, if you can, put more money in your company plan until you max it out. And if you get to the point where you can save even more (kudos!), put that money in a taxable brokerage account. The bottom line is you can’t really save too much, only too little.

Use all the savings and investing vehicles available to you, including both an IRA and your 401(k), to save as much as you can, as early as you can—and, at the same time, get the maximum tax break. You won’t regret it.

This blog was excerpted from an online article written by Carrie Schwab-Pomerantz, CFP®, Board Chair and President, Charles Schwab Foundation; Senior Vice President, Schwab Community Services, Charles Schwab & Co., Inc.; Board Chair, Schwab Charitable.

Making the Most of Your Charitable Donations

Shawn Glogowski on August 12, 2020

As we make our way through the pandemic, not for profits and community organizations are facing increasing challenges not only in serving those in need, but in keeping their doors open. These circumstances have led to a significant increase in the number of groups asking for donations.

How do you decide which causes to support? Additionally, if you’re concerned about getting a tax deduction for your contribution, the higher standard deduction, established by the Tax Cuts and Jobs Act of 2017, can make it a little more difficult.

These days you have to be strategic about those to whom you donate and the amount you give. Whether your donations are large or small, here are some ways to give meaningfully, stay true to your budget and to yourself—and possibly get a tax break as well

Personal strategies for giving

Just because you cannot give to every worthy cause, there’s no reason you have to feel ungenerous. With a little strategic planning, you can choose both the best place and the best way to share your good fortune.

Start with what’s important to you—Do you have a particular passion such as the arts, the environment, education, or fighting poverty? Is there an organization that has made a difference in your life? Giving to a cause that has a personal meaning can be both effective and rewarding.
Look to your own community—Making a financial contribution that will not only benefit a cause you believe in but also have a local impact can give your donation extra meaning. Consider a local food bank, a scholarship fund for a neighborhood school or a struggling homeless shelter in your city.
Narrow down your list—Chances are you can’t give to every charity on your list, so next think about where your donations will make the most difference and choose the top three. Consider doing a little extra research by comparing charities at an independent online rating service such as charitynavigator.org or charitywatch.org before you make your final choices.
Apportion your money accordingly—Decide on an overall dollar amount you can afford, and then decide how to distribute it. You don’t have to give the same amount to each charity nor do you have to give all the money at once. Many organizations welcome small regular contributions over time.

Getting a tax benefit for your contributions

Charitable contributions are still tax-deductible; howe ver, you have to itemize to get the benefit. With the higher standard deduction ($12,400 for a single filer, $24,800 for married filing jointly for 2020)—plus the reduction or elimination of many other itemized deductions—it can be a bit more of a challenge to get total deductions above that limit. Consequently, a lot of people will choose the standard deduction rather than claim the charitable deduction.

One possible solution is to give a larger amount every two or three years to help push you over the standard deduction rather than a smaller amount every year. This potentially would increase your deductions in the year you make your charitable contributions.

Also, to encourage giving and make it easier during the pandemic, the CARES Act provides a new “above the line” charitable contribution deduction of up to $300 if you claim the standard deduction in 2020.

For people who itemize deductions, it expands the limits on cash charitable contributions from 60 percent up to 100 percent of 2020 adjusted gross income.

Tax-smart ways to give

If tax advantages are an important part of your charitable-giving strategy, here are a couple of other ways to go about it.

A donor-advised fund (DAF) is one of the easiest, tax-advantaged means of giving to charity. It’s potentially more of an initial financial commitment but the ongoing benefits to you and the charities of your choice make it worth considering. It generally takes a minimum of $5,000 to open a donor-advised fund account; however, you may qualify to get an immediate tax deduction for the entire amount, if you itemize.
If you donate appreciated assets, you could not only get a tax deduction, but also potentially avoid having to pay capital gains taxes. You then use the funds to make grants to any public charity and any money not immediately distributed can be invested, potentially increasing the amount available to give. To me, if you have the means, it’s a great way to make an upfront contribution that you can then strategically manage over time. Plus, you can do most of it online—and have easy access to your giving history.
A qualified charitable distribution (QCD) from an IRA is another option for retirees who are over the age of 70.5 to give up to $100,000 a year to certain qualified charities. With a QCD, the donation is made directly from an IRA to the charitable organization, which means you don’t have to include that distribution in your taxable income.

Even though you don’t get a tax deduction from a QCD, it can be a tax efficient way to give—since the alternative of taking that distribution in to your income first and then making a donation could result in a higher tax on your Social Security benefits and Medicare premiums. In addition, a QCD can be used towards your required minimum distribution.

Whether you give a lot or a little, contribute money or time, by sharing what you have today you’re making a difference and investing in a better tomorrow for everyone.

This blog post was excerpted from an online article by Carrie Schwab-Pomerantz, CFP®, Board Chair and President, Charles Schwab Foundation; Senior Vice President, Schwab Community Services, Charles Schwab & Co., Inc.; Board Chair, Schwab Charitable

How Would You Rate Your Financial Know-How?

Shawn Glogowski on August 4, 2020

If someone asked you to rate your financial know-how on a scale of 1-7 (with 7 being the highest) where would you place yourself?

If you are like the Americans who participated in the 2018 Financial Investor Regulatory Authority (FINRA) National Financial Capability Study (NFCS), you would probably give yourself a pretty high score.

In that study, 76% of respondents placed themselves in the 5-7 range. The reality is that only 34% of those who participated could correctly answer at least four of five basic financial literacy questions on topics such as mortgages, interest rates, inflation and risk.

Curious about your own answers? Here’s your chance.

Click on this link at the bottom of this post to take the Financial Literacy Quiz. It not only gives you an immediate score, it shows you how you compare to others in your state.

Whether the quiz confirms your knowledge or serves as a personal wake-up call, the generally low results of the NFCS definitely demonstrate the need to improve financial literacy in our country. The good news is that there’s tangible proof that financial education works.

According to the 2018 NFCS, nearly half of Americans (49%) who have received more than ten hours of financial education report spending less than they earn, compared with 36% of people who received less than ten hours of financial education.

National Capability Study June 19.300.jpg

Research from the 2020 Council of Economic Education Survey of the States shows that students who receive financial education borrow more sensibly, from student and personal loans to credit cards.
Results from the PISA assessment show that young people and adults in both developed and emerging economies who have been exposed to high quality financial education are more likely than others to plan ahead, save and engage in other responsible financial behaviors.

The good news is that whether you are a parent, a teacher, an employer or a concerned member of your community, there are things you can do to help promote financial education for everyone in your community.

The Global Financial Literacy Center offers FastLane, with practical ideas and action plans for groups and individuals.
On CheckYourSchool.org, you can find the schools in your area that offer financial education and the ways you can start/reinforce local financial literacy programs.
DonorsChoose offers lesson plans and activities for educators that have been created by teachers in the field, for teachers. There are also opportunities to find school programs in your own community that you can support.

At the end of the day, there is a growing global awareness that financial literacy is an essential life skill that means not only greater prosperity, but better choices, increased confidence, and the ability to more successfully handle real-life financial challenges.

Financial literacy isn’t just about math. It is about attaining the knowledge and skills to confidently manage our everyday financial lives and the need for financial education, which is greater than ever locally, nationally, and globally

TAKE THE FINANCIAL LITERACY QUIZ

Parts of this blog were excerpted from an onlne post by Carrie Schwab-Pomerantz,CFP®, Board Chair and President, Charles Schwab Foundation; Senior Vice President, Schwab Community Services, Charles Schwab & Co., Inc.; Board Chair, Schwab Charitable

CARES Act Updates and Your Retirement

Shawn Glogowski on July 21, 2020

Historically, 70½ is the age when individuals have been required to take required minimum distributions (RMDs) from their retirement accounts, having until April 1 of the following year to take the first distribution.

The SECURE Act of 2018 changed that rule, raising the age for RMDs from 70½ to 72 while the CARES Act 2020 has made further significant changes. Below are important updates you need to know.

A retirement–related provision of the CARES Act 2020 allows the owners of certain retirement accounts — including inherited and beneficiary accounts — to skip otherwise mandatory RMDs for 2020. This provision applies only to defined contribution plans, including, 401(k) and 403(b) plans, IRAs, SIMPLE IRAs and SEP IRAs.

For those who want to take their RMDs, Cares Act Notice 2020-51 includes a sample plan amendment that provides participants and beneficiaries the option to receive their RMDs.

If you’ve already taken a now-waived RMD for 2020, you may be able to redeposit the funds. However there is a timing factor involved. Generally, such funds must be redeposited within 60 days of the distribution. Under the CARES Act 2020, the deadline for redepositing RMDs distributed in 2020 has been deferred to August 31.

Cares Act chalkboard retrirement.300.jpg

With respect to repayments, Cares Act Notice 2020-51 eliminates the once-per-year IRA rollover rule, which requires (and allows) only one rollover from an IRA in any 365 day period. It also removes this restriction for inherited IRAs.

The CARES Act 2020 further extends the rollover option to the IRA owner, a beneficiary spouse, and/or a non-spouse beneficiary, as long as the plan participant died in 2019 and the rollover occurs before the end of 2021.

Before the CARES Act 2020, money could not be withdrawn from a retirement account before the age of 59 ½ without incurring a 10% percent early-withdrawal penalty. Under the Act, individuals may be able to take one or more hardship withdrawals from their retirement accounts without penalty if they fall in to any of the following categories:

You, your spouse or your dependents are ill, having been diagnosed with COVID-19.
You’ve been hurt financially because you are out of work (quarantined, laid off, furloughed)or your hours are reduced.
You cannot work or get child care due to COVID-19.
You fall under another COVID-19 category established by the US Treasury Secretary

It’s important to note that such hardship withdrawals are limited to a total of $100,000 without incurring a penalty, unless you are at least 59 ½ years of age. Also, employers can place limitations on withdrawals from their 401(k) and 403(b) plans and those withdrawals are included in your taxable income over a three year period. You can avoid paying the income tax if you repay the withdrawals within the three years.

The same COVID-19 eligibility categories that govern hardshipwithdrawals also govern retirement account borrowing from current 401(k) and 403(b) plans. (Note: IRAs do not allow for this type of borrowing.)

Pre-Act, the maximum loan amount you could borrow was $50,000, or 50 percent of the vested balance in your account, if lower. Under the CARES Act 2020, you can borrow more. The maximum loan amount is the lesser of $100,000 or the vested balance in your account. Any loan repayments due between March 27, 2020 and December 31, 2020 are delayed for one year. However this one year delay is not factored in when accruing interest charges on the loan, which are based on the rules of your plan.

Good Business Fundamentals in any Economy

Shawn Glogowski on June 30, 2020

Over the last three months at Note, we have been engaged in virtual meetings with clients, working on ways to sustain their businesses in these trying, pandemic times.

Although a crystal ball might seem like the most needed tool in our advisor’s arsenal right now, here are some “good business” fundamentals we regularly share with clients that are important in any economy.

Hire the Best CPA, Attorney and Financial Advisor you can afford. Anything less can often become a big expense. Along the same lines, free advice often proves to be the most expensive.
Accumulate cash for opportunities and challenges. Keep in mind that other’s challenges may become your business opportunity.
Define the Core Values of your business and communicate them to all involved. Make sure to deliver customer service that clearly supports those values
Examine how to WOW your customer in a way that Amazon-at-your-door cannot.
Invest in the best employees you can attract.
Empower your employees to make decisions. Give them a budget for fixing mistakes and providing the highest level of service in their customer interactions.
Ask someone brutally honest and unfamiliar with your business or services to act as a customer and then grade their experience.

If you have questions or concerns about your business or need to discuss COVID-19 financial issues, we are here to help. Please contact Sarah Neuner at sarah@noteadvisor.com or (716) 256-1682 to make an appointment to meet in our office, via phone or virtually, online.

Retirement: Lifetime Payments or Lump Sum?

Shawn Glogowski on June 15, 2020

According to the U.S. Labor Department, in 1975 there were more than 103,000 employee pension plans in place as retirement income for Americans. By 2017, that number had dropped to about 46,700. Further, the number of private pension plans — which employers fund on behalf of workers — has also dwindled as companies have shifted the burden of retirement savings to their employees through 401(k) plans or other defined-contribution plans.

As a result of those changing realities, retiring workers now face their retirement decisions of lump sum or lifetime pension payments with concerns over whether their employers will be willing and/or able to meet the long-term commitments of their plans.

Most retirees like the idea of guaranteed income for the rest of their lives, which makes choosing continuing payments more appealing. However, today’s financial reality is that the stability of pension payments depend on the solvency of the sponsor. And while the federal Pension Benefit Guaranty Corporation (PBGC) would step in if a company could not meet its obligations, it may pay only a certain portion of an employee’s promised benefits.

The PBGC’s multi-employer insurance program currently coversthe pensions of 10.8 million Americans. The corporation also pays monthly retirement benefits, up to legal limits, to about one million retirees whose plans ended or failed. Concerningly, the agency’s most recent annual report shows that it is currently stretched to its limits, with forecasts of insolvency by the fiscal year 2025.

So what is the best choice to make? Below are some facts that may help in your decision-making process.

For those eyeing a lump sum due to fear of their employer going under or otherwise struggling to meet their pension obligations, it’s important to be aware of the fact that the lump sum amount offered is generally lower in comparison to the amount promised over time. That being said, because interest rates have generally remained low, recent lump sum offers have been bigger than if rates were high. .
In choosing to remain in the pension plan instead over a lump sum, the amount received may be fixed-for-life as pensions typically don’t have a cost-of-living adjustment.

Although some pensions offer spousal benefits (i.e., upon death, the husband or wife continues to receive a portion of the lifetime payments) there is nothing left for heirs. In contrast, in taking a lump sum, upon death there may be money that could be left to non-spousal heirs.
Choosing a lump sum and not rolling it into an individual retirement account or other qualified option will result in taxes on the distribution. Alternatively rolling the money to an IRA, will require decisions on the best ways to invest the assets to meet retirement income needs
An alternative option is to purchase an annuity, which would provide guaranteed income for either a set number of years or for the remainder of the investor’s life, depending on the type. However, it’s significant to keep in mind that to help meet those payout obligations, insurance companies invest in stocks, which means your investment is one step removed from market investments. Additionally, there is always the risk of the insurance company going belly up.

At the end of the day, any decision on retirement should be made in the context of the retiree’s financial plan and the long-term viability of all the companies involved.

Financial Planning Lessons

Shawn Glogowski on June 13, 2020

When the COVID-19 pandemic hit the United States, the lives of Americans were quickly turned upside down. Now, three months later, many have suffered personal financial disasters due to the loss of jobs and paychecks.

There are a number of financial lessons to learn from this pandemic, chief among them the value of planning and having emergency funds. Without such funds, you can be forced to tap other accounts, take out a loan, or face more dire and damaging financial options.

So what should you do if you do not have an emergency fund set aside to cover your expenses for a few months?

1) To begin, start one as soon as you can. Divert money into the account whenever possible. If you do already have an emergency account, continue to add to it.

2) Review expenses related to your job. Consider the money you spend on transportation costs, clothing, dry cleaning, entertainment, meals and those daily coffee runs. Where you can cut costs, take that money and put it in a place where it can grow.

3) If you are worried about losing your job, or if you already experienced a pay cut, find ways to reduce your overall spending by 20% or more. Separating essentials from non-essentials is a good way to eliminate things you do not need.

4) Do not overlook the importance of estate planning and investing in your retirement. Continue to contribute to your 401K, and if you have to borrow from it, do not drain it.

5) If the events of the last three months have encouraged you to think about drawing up a will, now is the time. Also, update any estate planning that needs to be done, as well as end of life directives.

All of the above are integral parts of proper financial planning which, as COVID-19 has reminded us, are important lessons to learn and follow.

Easy Ways to Safeguard You and Your Money

Shawn Glogowski on May 29, 2020

Have you ever noticed an unauthorized withdrawal from your bank, brokerage, or credit card account? Such suspicious activity can mean only one thing: Your finances have been invaded.

If this has happened to you, know you are not alone. According to a November, 2019 Nilson Report, “Credit card fraud losses in 2018 reached $27.85 billion.

The good news is that if you find yourself the target of financial fraud, there are steps you can take to limit losses and help prevent unauthorized activity from happening again.

1. Act fast

It’s in everyone’s interest to identify suspicious activity as soon as it surfaces. Your financial institution can freeze the compromised account, issue a new card, reset a password, and perhaps even help track down those responsible. Be sure to initiate contact through a known number or website; never respond to an unsolicited email, phone call, or text—no matter how legitimate it may seem.
Financial institutions generally have security policies that outline how they handle fraud—including your liability, if any, in the event of unauthorized activity.
Viruses and malware are commonly tied to fraud schemes. Indeed, if a virus is left unchecked it can capture your new username and password, even if it was changed after the initial breach.

2. Go wide

Whenever you spot fraud in one account, change the credentials on any other accounts with the same usernames and/or passwords. Better yet, assign a unique password to each financial account, as well as every site where you store bank account or credit card information.
Of course, it can be difficult to keep all those passwords straight. Password managers, such as Dashlane and LastPass, can generate a unique password for every account, keep track of them all, and even securely auto-populate username and password fields.

3. Stay Alert

In addition to fraud alerts, many credit card issuers can notify you when they process online or over-the-phone transactions that don’t require a physical card. In 2018, such transactions accounted for 54% of all fraudulent activity worldwide involving credit, debit, and prepaid cards. Bank and brokerage accounts also offer alerts and notifications for certain types of transactions.
Regularly review your statements and credit report to ensure no fraudulent activity flies under the radar. Each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) is required to provide one free credit report annually, so consider requesting a report from one of the agencies every four months.
Placing a security freeze with Experian, TransUnion, or Equifax can prevent others from opening a new credit card or loan in your name. Better yet, place a freeze with all three agencies to ensure maximum protection. If you need to apply for credit in the future, you can temporarily lift the freeze using a password or PIN.

4. Double up

Activate two-factor authentication: This safeguard, now standard among financial firms, issues a single-use code via email or text that you need to enter along with your username and password to gain access to your account.
Enable biometric recognition: Biometrics let you unlock a device or log in to an account with your face, fingerprint, or voice. Unlike passwords, biometrics can’t be written down (or lost) and are much harder for criminals to replicate.

Go the extra mile

In addition to the above four steps, consider reporting your experience to TheFederal Trade Commission. The agency’s reporting process isn’t designed to resolve individual incidents or recover funds, but your report helps them track trends in fraud and better understand the methods criminals are using, which may help financial firms improve their defenses.

It’s also a good idea to file an Identity Theft Report at identitytheft.gov. This entitles you to extra protections, such as placing an extended fraud alert on your credit report and preventing companies from collecting debts that result from identity theft.

Summer Jobs and Tax Returns

Shawn Glogowski on May 26, 2020

If your child picks up a summer job, they may or may not be required to file a federal tax return and/or pay federal taxes. It all depends on the type of job and how much they earn. The charts below provide some simple guidelines.

These tables are for general informational purposes only. They address only federal filing requirements for earned income. Other federal filing requirements may apply; see IRS Publication 929 for more details. — THESE TABLES ARE FOR GENERAL INFORMATIONAL PURPOSES ONLY. THEY ADDRESS ONLY FEDERAL FILING REQUIREMENTS FOR EARNED INCOME. OTHER FEDERAL FILING REQUIREMENTS MAY APPLY; SEE IRS PUBLICATION 929 FOR MORE DETAILS.

Even if your child is not required to file a federal tax return, it’s wise to consult with your financial planner or tax advisor, as he or she may be due a tax refund. And be sure to include your child in that consultation and any filling that may result. It’s never too early to start young wage earners on the road to financial literarcy—-teaching them the significance of taxes and and the ramifications of not managing them correctly.

This blog was excerpted from a Charles Schwab Personal Finance and Planning online post.