Let the Taxpayer Beware: Learn to Spot 6 Common Tax Scams

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Now that your W2s and miscellaneous tax documents have arrived, tax season is officially in full swing. While it’s easy to get lost in optimistic daydreams about your tax refund and all you’re planning to do with it, it’s important to remember that scam artists are probably dreaming about what they could do with your refund as well.

After reaching an all-time high of more than 700,000 cases in 2015, tax refund fraud has been declining thanks to significant enforcement efforts by federal, state, and private agencies. While these statistics are encouraging, they also highlight the ongoing need for caution and vigilance. So, before you file your 2018 taxes or pay someone to file for you, we want to remind you about six of the most common tax-related scams happening today.

Phishing Emails 

This one is relatively easy to spot. Why’s that, you ask? Because the IRS doesn’t initiate communication with taxpayers via email. So, if you see an email from the IRS pop up in your inbox—even one that looks remarkably official, don’t open it. For good measure, go ahead and mark it as spam before deleting it. Emails of this type have only one goal: to trick you into clicking a fraudulent hyperlink or responding with sensitive personal information.

Phishing 2.0

In 2018, the IRS reported a new twist on traditional phishing scams. In the new approach, fraudsters hacked the systems of legitimate tax professionals, stole tax returns containing personal details, and then deposited funds directly into taxpayer bank accounts. After those deposits hit the bank, the criminals posed as the IRS or collection agencies and contacted account holders demanding a resolution to the error. The goal of these scams is not to simply regain the money deposited “in error,” but to get the victim to share account details that can be used to access the account at another time. If you find yourself with an unexpected deposit in your bank account, the IRS offers helpful instructions here.

Phone scams 

Though they come via phone call, these scams are essentially the same as phishing emails. The difference lies in the fact that con artists can spoof IRS phone numbers in an attempt to convince unsuspecting people to answer the call. Once the phone call is underway, the person on the other end claims to be an IRS agent and tries to get the individual to confirm private account details in an attempt to “resolve the situation.” If they don’t get the results they’re hoping for, the fraudsters may even follow-up with phone calls where they impersonate law enforcement officials and threaten legal action. To avoid accidentally divulging personal details, it’s best to ignore these calls completely. Just as the IRS doesn’t initially contact taxpayers by email, they also don’t initiate official communication by phone either.

Refund Theft 

This type of scam takes place at the intersection of identity theft and financial fraud. Using a variety of tactics, criminals obtain taxpayer social security numbers and file fraudulent tax returns in their name—often claiming substantial refunds. Since this happens without the knowledge of the victim, it only comes to light when their legitimate tax return is rejected due to a previous return already filed under the same social security number. While the IRS is committed to resolving these issues when they happen, the process can be long and tedious. To safeguard yourself against tax refund theft, IRS officials recommend obtaining an Identity Protection PIN, also known as an IP PIN. Instructions for securing a PIN can be found on the official IRS website.

Shady Tax Prep Services

Since an estimated 79 million Americans use paid tax preparation services, there are considerable opportunities for dishonest preparers to abuse the system. One of the most common scams involves a preparer illegally inflating an individual’s refund and collecting a percentage of the taxpayer’s refund instead of a flat fee. Many times, the problem isn’t identified until after the refund has been issued and the preparer’s fee has been collected. In these scams, the preparer is long gone by the time that the problem is identified, and the taxpayer is responsible for handling the audit on their own. While the practice of a tax preparer charging a percentage of refund isn’t technically illegal, you’re better off avoiding this type of arrangement and opting for a flat-fee service instead.

Public Wi-Fi Scammers

It seems like this one should go without saying, but we could all use a reminder from time to time. The public Wi-Fi at coffee shops, libraries, and bookstores can be great for hopping online to browse social media, but it’s terrible for filing your taxes. Not only can these unsecured networks be accessed by almost anyone, but dishonest scammers can also set up hot spots that look like the establishment’s Wi-Fi and intercept logins, passwords, and personal information. So, if you’re filing taxes electronically this year (and considering the fact that approximately 90% of taxpayers filed electronically in 2018, you probably are), do yourself a favor: file at home from your personal computer and your secure Internet connection.

As with most financial scams, these can be simple to sidestep as long as you know the signs to look for. If you observe questionable practices, want to read up more on tax season scams, or have additional tax-related concerns, you can find more information and helpful instructions here on the official IRS website.

If you are receiving a federal or state tax refund this year and want to make the most of your money, contact us here at First Financial Federal Credit Union. Our financial specialists can help you assess your financial situation and show you all the beneficial programs and products available to you as a credit union member. Call, email, or stop by a branch today!

Don’t Fall for a Work From Home Scam

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The promises of making it big by working from home are definitely out there, and most of the time it’s a scam. Though you may already be on high alert, online job scammers have gotten more sophisticated – and some may still slip past your radar.

Besides heeding the old adage that if it sounds too good to be true, it probably is – job seekers should consider the following questions when reviewing potential work from home opportunities:

  • Does the job listing include the hiring company’s name and/or does the recruiter or job posting match the company’s information?
  • Are there any upfront costs required to get the job? (Supplies, a minimum investment or training fees).
  • Are there any typos on the site or in any correspondence?
  • Are you being asked to provide personal information like a social security number, credit card number, bank information, or driver’s license?
  • Did they offer you a job on the spot without conducting an interview?

If the answer is yes to any of the above, experts say that’s a red flag, and the “dream opportunity” might become a nightmare.

Here are the 5 most common work from home scams:

Career advancement grant: This scam claims to come from the government, promising you a grant to pursue education or a certification. Scammers ask for your bank account information with the promise that they will deposit the bogus grant money directly into your account.

Data entry scams: There are legitimate data entry jobs that allow you to work from home, but these scammers ask for money up front and/or promise wages that are much higher than normal.

Pyramid schemes: If the only way to make money is by others losing money or paying you as they recruit others, it’s probably a scam. Plus, pyramid schemes are also illegal – so you could be charged with a crime too.

Online reshipping: Don’t ever repack items and forward them to customers outside of the United States. What you’re doing is transporting stolen goods, and not only will you never get paid, you could also be charged with a crime.

Rebate processor: This scam promises you a salary based on the number of clicks your ad receives. It charges a training fee up front for which you will never be reimbursed, and you’ll never receive that salary, either.

Scammers can be very creative in convincing you that a position or company is legitimate, so do your research. Check with sites like BetterBusinessBureau.com, FTC.com, and Scam.com to learn of recent employment scams.

Article Source: Myriam DiGiovanni for FinancialFeed.com

5 Simple Steps to Stop Overspending

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You probably have the best intentions when it comes to saving money. With all the temptations out there, it can be hard to keep your finances in line. Splurging here and there every once in awhile is okay – but the habit of overspending can become a much bigger problem if you don’t keep things in check. Check out these five steps to stop overspending, before it gets out of hand.

Understand Your Triggers

Overspending is often caused by impulse shopping. When you’re out shopping, do the small items in the checkout aisle get you? Do you always pick something up while waiting at the checkout line, even though you don’t actually need anything? Ask yourself why. It’s important to understand what your triggers are. Do you spend because it gives you a thrill or because you’re bored and have nothing else to do while waiting in line? Understanding exactly why you overspend will help you get to the root of the problem and find lasting and realistic solutions.

Track Your Budget

The most important thing you can do to stop overspending is to actually have a budget and track your expenses. It’s not enough to just have a rough idea of how much you’re spending. You need to know exactly where your money is going and what you’re spending on everything. Start logging expenses in the budget whenever you buy something or pay a bill. At the end of the month, sit down and analyze your spending habits. You might be surprised at what you find out, and even more surprised when you realize you can cut a lot out without feeling much of a sacrifice.

Learn to Say No

Overspending has a lot to do with social pressures. Sometimes it’s just really hard to say no. You might be trying to keep up with the Joneses, or maybe your friends are just constantly asking you to go out. Think about your priorities before you agree to anything. Is the decision going to hurt your finances and should you really be making that commitment? Learning to say no is a big part of being financially responsible. The sooner you learn what you can and can’t afford, the closer you will be to financial independence.

Live Within Your Means

Here’s a simple thing you can do to improve your finances: don’t spend more than you have. Getting into the habit of spending every paycheck is dangerous even if you never get into debt, because emergencies do happen and you will need savings to fall back on. It’s even worse if you overspend and fall into debt to make purchases. Once you owe money, you not only have to pay for what you buy, but you also need to pay interest on what you owe – effectively making your paycheck smaller for the foreseeable future. Learn to live within your means. It’s certainly not easy at the beginning, but scaling back little by little will set you up for long term success.

Allow Small Rewards

Personal finance is serious business, and most of the time it may not seem very fun. That doesn’t mean you can’t enjoy yourself in the process though. Don’t forget to budget for a “YOU” fund. Allow yourself small rewards from your paycheck. Just make sure the “YOU” fund doesn’t cause you to go over your budget.

Article Source: Connie Mei for moneyning.com

5 Reasons You’re in Debt

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Are you in debt and not sure how you got there? Some of these reasons may be the culprit.

1. You justify your purchases

Don’t try to rationalize unnecessary purchases. On some level, we are all guilty of this. Between “I deserve this” and “I need this,” we’re constantly making excuses for spending money. This doesn’t mean you can’t treat yourself, but do it affordably and make sure you budget for it.

2. You refuse to address your debt

The first stage of grief is denial, and dealing with debt can look very similar. Do not ignore your debt. As difficult as it is, you need to face your debt head on. Understand what you owe and create a plan of attack.

3. You are an impulse spender

With next day shipping and one-click shopping, this has never been a more prevalent issue for consumers. These purchases are beyond trying to justify, and that impulse is what is hurting your wallet. Try holding off on some purchases unless you’ve given them some thought, or saved up first.

4. You assume you are going to make more later

A great example of this is taking on student loans. Most students don’t have a choice if they want to go to college, and are now graduating with debt upward of $40,000 in hopes that they can land a job that will pay them enough to pay it back. In other cases, people are making purchases because they think they will be up for a promotion or have a raise around the corner. Even if all of these things do come to fruition, you will still be paying more in interest than if you’d waited.

5. You often dip into savings for expenses

J.P. Morgan once said, “if you have to ask how much it is, you can’t afford it.” When you look at a price tag and immediately start thinking about how to move money around, take a step back. Once that money goes into your savings, it should disappear from your thoughts. The only time you should ever spend money from savings is when there’s an emergency and you need to use your emergency fund.

Article Source: Tyler Atwell for CUinsight.com

Mind the GAP: Understanding the Value of GAP Coverage

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Picture the following scenario: After months of research and planning, you take the plunge and buy a new car. Once the financing is secured and your auto insurance is in place, you’re ready to hit the road. You’re so excited about your sparkling new ride that you’re not even worried about the fact that most new cars depreciate by as much as 10% the moment you drive them off the lot—and up to 20% in the first year.

Now, imagine that after just a few weeks, you’re involved in an accident that badly damages, or worse yet, totals your car. (Don’t worry—unlike your car, you emerge from this imaginary situation without a scratch). Fortunately, you did the responsible thing and secured good auto insurance. Once all the proper claims have been filed, you find out that insurance will only cover your car’s market value—which, due to the depreciation, is several thousand dollars less than the amount you actually owe on your auto loan. If only there were a type of loan protection that would help you make up that difference. Fortunately, there is. It’s called Guaranteed Asset Protection—or GAP, for short.

What is GAP?

GAP coverage is an optional protection plan offered with auto loans or leases, and depending on the plan coverage limits, it effectively waives most of, if not all, the remaining balance on your loan. While your auto insurance plan’s comprehensive and collision policies cover your vehicle’s value in the event that it is totaled or stolen, GAP coverage is designed to ensure you don’t get stuck making payments on a car you no longer own.

How do I know if I need GAP coverage?

While the product makes good financial sense for some, not everybody needs to get a GAP policy. According to the financial experts at NerdWallet, there are a few basic guidelines that will help you decide whether GAP coverage is right for you. You should strongly consider adding a GAP policy to your auto loan if you:

  • Made a small down payment on a new car, or none at all.
  • Agreed to a loan term longer than 48 months.
  • Drive a lot, which reduces a car’s value more quickly.
  • Lease your car.
  • Bought a car that depreciates faster than average.

Where do you get GAP coverage?

While a variety of companies provide GAP coverage for consumers, it often makes the most sense to obtain the protection plan from the same financial institution that will be financing your vehicle purchase in the first place (which is hopefully your local credit union). If you already financed your vehicle through a dealership, keep in mind that many GAP programs are refundable up to a certain number of days. This means that should you decide to refinance your auto loan through a credit union, they may be able to help you get a refund on your original GAP plan and secure a new plan at a lower cost.

Not only are credit union GAP plans traditionally less expensive than those available through finance companies, they can typically only be added to your loan at the time of closing (vehicle age and mileage limits also apply). Securing coverage through the financial institution that services your loan reduces the need to coordinate communication between multiple parties. It also increases the likelihood that you can put a frustrating accident experience behind you sooner rather than later—and that peace of mind is priceless.

If you have questions about Guaranteed Asset Protection or want to know how to add it to your auto loan before you close, contact a financial representative at First Financial. They can help you review your current financing situation and determine whether GAP coverage is right for you.*

*Your purchase of MEMBERS CHOICE™ Guaranteed Asset Protection (GAP) is optional and will not affect your loan application for credit or the terms of any credit agreement you have with us. Certain eligibility requirements, conditions, and exclusions may apply.

3 Habits of Highly Effective Savers

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When life changes, adjust.
Whether it is having babies, job changes, or the purchase of a new home, life is constantly changing. Every life changing event leads to an increase or decrease of your available funds. People who save effectively will look at these situations as opportunities to adjust the way they save. This may mean a temporary hold on saving, but always make sure you plan for a time when you can begin saving money again.

Play for keeps.
People who are great at saving don’t look at their paychecks as something to spend. They look at their paychecks as something to keep. Center your financial decisions around the question: How do I spend less, save more, and still obtain the things I need?

Set aside part of any extra earnings.
While your yearly income is (hopefully) predictable, we sometimes receive money we did not expect or budget for. This can be a tax return, bonus at work, birthday money, credit card rewards, etc. A great saver will put at least a percentage of each windfall they receive into their savings account.

If you’re looking to save, check out your local credit union like First Financial! We offer a great variety of options in savings accounts and savings certificates, which are Federally Insured by the NCUA.*

A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the program. Click here to view full Rewards First program details.

Article Source: Robbie Young for CUInsight.com