Ideas to Protect your Social Security Number
Ideas to Protect your Social Security Number SSN theft is still a major problem! With the dramatic increase in identity theft, now is a great time to remind yourself of the basics to reduce the risk of having your Social Security number (SSN) stolen. Here are some ideas. Do not carry your Social Security card with you. Your parents were encouraged to do this, but times have changed. You will need to provide it to a new employer, but that’s about it. Know who NEEDS your Social Security number. The list of people or organizations who need to have your number is limited. It includes: Your employer. To issue wages and pay your taxes. The IRS. To process your taxes. Your state’s revenue department. To process your state’s taxes. The Social Security Administration. To record your work history and track future benefits. Your retirement account provider. To enable annual reporting to the IRS. Banks. To enable reporting to the IRS. A few others. Those who need to report your activity to the government (investment companies, for example). Do not use any part of your Social Security number for passwords or account access. Many retirement plans use your Social Security number to enable you to access their online tool. When this happens, reset the login and password as soon as possible. Do not put your Social Security number on any form. Unless a business has a legal need for your number, do not provide it. Common requests of this number come from insurance companies and health care providers. Simply write, “Not available due to theft risk” in the field that requests your number. If the supplier says they need it, ask them why. Do not note your full Social Security number on any form. If you are required to give out your number, try marking out the first five numbers (i.e. xxx-xx-1234). Do not put your Social Security number on your checks. If requested by the government to place your number on a check to apply a payment, simply put the last four digits on the check. Never give your number out over the phone or in an e-mail. Remember to periodically check your credit score with the major agencies to ensure your data has not been compromised. Once stolen, it’s often difficult to get a new SSN issued.
Paying a Tax Bill With a Credit Card
Paying a Tax Bill With a Credit Card Understand the options and costs Your tax bill has come and gone with you still owing money because you’re a little strapped for cash. Or maybe you’re considering alternative payment options for your upcoming quarterly estimated tax payment. There’s also noise out of Washington, D.C. that checks will no longer be accepted. Whatever the case, the IRS continues to make credit card payments an option for you to pay your taxes. Here’s what you need to know about using credit cards when considering this option to pay your tax bill. What you need to know The IRS has contracted with several credit card merchants to offer credit cards as a method of payment. Why not? Most of us are used to paying for merchandise from groceries to sweaters with our credit card. Ah, but there’s a catch. Stores (called merchants by the credit card companies) pay a fee that is split between the merchant’s credit card bank, the transaction processor, and your credit card company for each transaction. This fee, known as an interchange fee, is not going to be paid by the IRS. You must pay it. The processing fee The fee paid by you for paying your tax bill with a credit card is called a convenience fee by the IRS and the credit card processors. The fee is based on a percent of the amount charged from 1.75% to 1.85% with a minimum fee of $2.50 or more. For example, using Pay 1040 Corporation’s credit card transaction fee of 1.75% with a $2.50 minimum fee, and a tax bill of: $150.00 would cost you $2.63. $1,000.00 would cost you $17.50. But don’t forget, if you don’t pay your credit card balance in full you must also include the interest cost of the loan you’re taking out courtesy of the credit card company. This incremental interest could be as high as 25%! The good news. You can use any of the four major credit cards to pay your taxes: Visa, Mastercard, American Express, or Discover. In addition, you can earn miles and points if you use a rewards credit card. The bad news. This payment method adds an expense to your tax bill. Plus, you are limited to the number of payments you can make using this method to two per year. Better alternatives Remember, if you are considering paying your taxes with your credit card and you carry a balance from month to month you are really taking out a loan to pay your taxes. Using this perspective: Get a better loan somewhere else. Perhaps a short-term loan from a bank or credit union makes more sense. Consider borrowing the money from a family member. If you create the proper loan documentation, it might be a good way for that family member to earn a nice interest rate. Consider borrowing from Uncle Sam. There are installment payment plans available for qualified taxpayers. While there is a set up fee, the monthly interest charged by the government is typically much lower than that charged by credit card companies. Use planning to your advantage. Create a plan to pay for next year’s tax obligation throughout the year to avoid a repeat of needing funds to pay your tax bill. This may cause some hardship, but saving a little bit more each week through payroll withholdings is usually more manageable for most of us versus a big tax bite in April. While paying your tax bill with a credit card is often one of the most expensive ways to pay your taxes, it’s vastly less expensive than paying high penalties and interest on unpaid taxes.
Watch Out For These Tax Surprises
Our tax code is filled with ways to reduce your tax bill—but it also contains a few traps that can lead to unexpected tax obligations. Understanding where these surprises can appear is the first step in planning ahead. Here are some of the more common tax situations that catch people off guard. Home Office Tax SurpriseIf you claim a home office deduction, you may end up paying taxes when you sell your home. Homeowners who meet the ownership and use requirements can exclude up to $250,000 (single filers) or $500,000 (married couples) of profit from the sale of their primary home. But if you’ve used part of your home exclusively for business, you may have to pay taxes on a portion of the gain. For example, if your detached home office makes up 5% of your total property, then 5% of your profit from the sale may be taxable. Even more surprising, if you claimed depreciation for your home office—even if it was inside your main home—that portion must be recaptured and taxed when you sell the property. This rule catches many home-based business owners off guard. Tip: If your office is in a detached structure, consider moving it into your home before the year of sale to potentially reduce taxable gain. Kids Getting Older Tax SurpriseYour children may be wonderful tax deductions—until they age out of them. One of the biggest benefits is the Child Tax Credit, worth up to $2,000 per qualifying child under age 17. But once your child turns 17, that credit disappears, even if they’re still living at home. For example, if your child turns 17 in 2025, you will not be eligible for the credit on your 2025 return filed in 2026—resulting in a potential $2,000 increase in your tax bill. Other credits and deductions can phase out as children grow older too, so review your eligibility annually. Limited Losses Tax SurpriseSelling investments at a loss can help reduce taxes—but only up to a point. Let’s say you sold one asset at a $5,000 loss. If you have another asset with a $5,000 gain, the two cancel out. But if you don’t have gains to offset, your deduction is limited. The IRS only allows you to deduct $3,000 of capital losses per year ($1,500 if married filing separately). The remaining losses carry forward to future tax years—but not immediately. This can be a surprise if you’re expecting a larger deduction. If you’re facing significant losses, coordinate with gains whenever possible to maximize your tax benefit in the current year. Relying Too Heavily on Last Year’s Tax ReturnIt’s common to use your prior year’s tax return as a starting point for planning. But if your financial situation changes and you don’t adjust your plan accordingly, you could face an unpleasant surprise. Changes in income, deductions, credits, or tax laws may result in a different tax bill than expected. Don’t assume next year’s taxes will mirror the past—make adjustments as your circumstances evolve. Avoiding the Unexpected Many tax surprises are avoidable with the right planning and awareness. Whether it’s aging children, investment losses, or a potential home sale, being proactive can save you from costly mistakes. Need help with your 2025 tax strategy?Schedule a tax planning session today to prepare for the road ahead—and steer clear of these common pitfalls.
Reminder: Second Quarter Estimated Taxes Are Due
Now is the time to make your estimated tax payment If you have not already done so, now is the time to review your tax situation and make an estimated quarterly tax payment using Form 1040-ES. The second quarter due date is now here. Due date: Monday, June 16, 2025 You are required to withhold at least 90 percent of your 2025 tax obligation or 100 percent of your 2024 tax obligation.* A quick look at your 2024 tax return and a projection of your 2025 tax obligation can help determine if a payment is necessary. Here are some other things to consider: Avoid an underpayment penalty. If you do not have proper tax withholdings during the year, you could be subject to an underpayment penalty. The penalty can occur if you do not have proper withholdings throughout the year. W-2 withholdings have special treatment. A W-2 withholding payment can be made at any time during the year and be treated as if it was made throughout the year. If you do not have enough to pay the estimated quarterly payment now, you may be able to adjust your W-2 withholdings to make up the difference. Self-employed workers need to account for FICA taxes. In addition to your income taxes, remember to also account for your Social Security and Medicare taxes. Creating and funding a savings account for this purpose can help avoid a possible cash flow hit each quarter when you pay your estimated taxes. Don’t forget state obligations. With the exception of a few states, you are often also required to make estimated state tax payments if you have to do so for your federal taxes. Consider conducting a review of your state obligations to ensure you also comply with these quarterly estimated tax payments. If your income is over $150,000 ($75,000 if married filing separate), you must pay 110 percent of your 2024 tax obligation to avoid an underpayment penalty.
Making Bad News Good Tax News
With the pending tariffs and turbulent markets, the last thing on most taxpayers minds is tax planning. But in the midst of all this turmoil is the potential for tax saving activity available to those willing to plan accordingly. Here is what you need to know. In a turbulent market, transferring securities during a dip in the market can save a bunch in taxes. So if part of your retirement plan is to balance your funds between pre-tax and after-tax obligations, now might be time to act. Recall that traditional IRAs, 401(k)s and similar accounts must pay income tax upon fund withdrawal, whereas money withdrawn from Roth IRA and Roth 401(k) accounts generally are not taxable. There’s no limit to the amount you can convert from a traditional IRA, or 401(k) into a Roth IRA. Remember that unless Congress acts, the tax rates are going up next year. And the old ability to reconvert stocks from a Roth back into a traditional IRA or 401(k) is no longer possible. So a set of stocks once worth $100,000 but are now valued at $70,000 can be converted now with $30,000 less in taxable income. If you are planning on holding the stock and you believe it will recover in the long run, you have a tax savings opportunity. Plus the future appreciation will no longer be taxed! This tax savings idea is not for everyone. The stocks could decline further, creating an opportunity cost. So if considering this tax tip, it should be managed in conjunction with the appropriate planning and investment expertise. But if you were considering a balance of your retirement funds between taxable and tax-free sources, you may have a tax planning opportunity at the door step.
Research Your Preferred Charities
Summertime often sees an increase of natural disasters, with hurricane season soon after. You may want to help, but you want to make sure the organizations are not a scam. And while fewer taxpayers itemize deductions, those that do want to ensure there deductions are legitimate. Here are some tips on how to research these organizations prior to donating funds. 1. Charitable organization efficiency. For every dollar you donate, only a percentage of it is actually used to fund programs. Much of your money is used for fundraising and administrative costs. So how do you know which charitable organization is using your contribution most effectively? Here are three websites that can help you assess potential charities. Charity Navigator Better Business Bureau: Charities and Donors Charity Watch 2. Avoid Fraudulent Solicitations. It is often best to avoid donating over the phone or via email solicitations. These are two common ways thieves target their victims. Instead of reacting to a phone call or email, a better idea is to proactively plan who you wish to give money to each year. An additional benefit of this approach is that you avoid the fees paid to these middlemen fundraisers out of your donations. 3. Confirm the Deductibility. Many smaller organizations will represent themselves as a qualified charitable organization, but have not kept their non-profit status up-to-date. If unsure whether your desired charity has kept their records up-to-date, you can check the IRS website for a full list of qualified organizations. Here’s the link: IRS Charity Status 4. Needing a receipt. Remember cash donations $250 or more require a written confirmation from the charitable organization of your donation in addition to your canceled check or bank receipt. If you aren’t sure whether a confirmation will be forthcoming, limit your deduction to some amount under this $250 threshold.
GREAT! You Have a Large Refund
For some reason, some believe it’s better to receive than to give when it comes to filing taxes. While that may help your savings account, it’s not always a great idea. Here’s why. You are the bank. You are giving the IRS an interest-free loan. And now with higher interest rates, you could be giving away a lot of earned interest on that overpayment to the government. Debt costs a lot. Consider lowering your withholdings throughout the year and using the extra money to pay down your debt. Even better, the benefit of paying down a home loan in the early years of a mortgage can yield tremendous savings! IRS identity theft is common. The longer you have your money in the hands of the IRS, the higher the chance some unsavory character is going to try to get it for themselves. Should this happen to you, the IRS will fix the problem, but it is typically taking two years according to a recent taxpayer advocate report. In the meantime, there is paperwork and hurdles to overcome while your refund is delayed. You could fund something else. Instead of money being parked at the IRS, you could be investing in your retirement or funding a Health Savings Account to pay for medical expenses in pre-tax dollars! So in addition to saving money, you could also be lowering your tax bill! So you received a refund. Congratulations. Now you have an opportunity to make tax tips work for you.
Be Prepared. Audits Still Happen.
Taxes can be complicated, and the rules often come with exceptions. While it’s always wise to consult a professional, here are answers to some of the most frequently asked tax questions. What Happens If a Loan Is Forgiven?If a lender cancels your debt, the IRS generally treats the forgiven amount as taxable income. That means you may need to report it on your tax return and pay taxes on it. You’ll typically receive Form 1099-C, which shows the canceled amount. There are exceptions, so check with a tax advisor to see if you qualify for relief. Is My Child’s Lemonade Stand Money Taxable?Yes. Any money your child earns—from mowing lawns, babysitting, or a lemonade stand—is considered taxable earned income. Even if they owe no income tax (thanks to the $15,000 standard deduction in 2025), they may still owe Social Security and Medicare taxes if they’re considered self-employed. Are Credit Card Rewards Taxable?It depends. Not taxable: Cash back or travel points earned by spending money. Taxable: Bonuses or referral rewards received without spending (such as a sign-up bonus just for opening a card). The IRS considers non-purchase-based rewards as taxable income. Do Employer Contributions Count Toward My 401(k) Limit?No. Your employer’s contributions do not count toward your annual 401(k) contribution limit. In 2025, you can contribute up to $23,500 yourself, and if you’re age 50 or older, you can make an additional $7,500 catch-up contribution, for a total of $31,000. What Happens to Retirement Account Loans When I Change Jobs?If you took a loan from your employer-sponsored retirement plan, you usually must repay it quickly when you leave the job. If not repaid, the loan becomes a distribution, which is taxed as income and may be subject to a 10% early withdrawal penalty. Do I Need to Report Gifts I Give?Yes—but only if you give more than $19,000 to any one person in 2025 (or $38,000 as a married couple). If you exceed that, you’ll need to file a gift tax return. You won’t owe taxes unless your total lifetime gifts exceed $13,990,000 (or $27,980,000 if married). Should I Report a Loss?Absolutely. Whether it’s a stock loss or a business loss, report it. Why? Because you may be able to offset other income with the loss, and even carry it forward to future tax years. Losses can provide valuable tax relief when used strategically. Have more questions? A quick planning session with a tax professional can help you avoid surprises and make the most of your situation.
An Earnings Report Review is For Everyone!
An Earnings Report Review is For Everyone! It is now easier than ever to check your report Most of us go through life without being concerned with, or ever checking on, our Social Security records. We assume the money deducted each payday and an equal amount paid in by our employer is applied properly to this valuable retirement benefit. Ignoring is problematic The Social Security Administration (SSA) is being inundated with fraudulent W-2s and 1099s, and doesn’t have the ability to catch them all. This is creating a high degree of reporting errors, even when a tax return is not filed by identity thieves! In addition, the SSA and your employer occasionally have their own errors. Unfortunately, the only way these problems are caught is if YOU catch them. Waiting until retirement may be too late to correct an error made 10 or 20 years back. Common problems created by these errors and their impact are: Incorrect amounts. If the SSA does not receive a W-2 wage statement from an employer, you will not see credit for these earnings. Since your Social Security retirement check amount averages your lifetime earnings, if you have earnings that are missing, your retirement check will be permanently lower! Missing the correct length of time. In addition to receiving credit for earnings, you also need to work 40 quarters or 10 years to be fully eligible for retirement benefits. These missing earnings reports reduce your number of working quarters. Mess up here and you may not qualify for benefits at all! The three-year correction time limit. Per the SSA, an earnings record can be corrected at any time up to three years, three months, and 15 days after the year in which the wages were paid or the self-employment income was derived. While there are exceptions for fraud and obvious clerical errors, why risk the hassle by not finding errors and fixing them when they happen? Action to take Thankfully, it is now easier to confirm the accuracy of your account by going to www.ssa.gov and using the SSA’s online tool that allows you to review your historic earnings statements. To use the tool, you will need to go through a signup process that includes many safety measures to ensure your identity is protected. This is usually done using a tool called ID.me and will require a valid ID and a way to take a photo of yourself and your ID. Once you log in, review your statement for any errors. If you see an error, takes steps to immediately correct it. You can do this by contacting the SSA: Telephone: 1.800.772.1213 By mail: Social Security Administration Office of Earnings Operations PO Box 33026 Baltimore, MD 21290-3026 Since you may have just completed last year’s tax filing, now is a great time to get in the habit of reviewing your Social Security records. It is your future.
Annual Tax Quiz – Quirky Tax Facts!
From quirky tax laws to surprising deductions, this fun 10-question multiple choice quiz will test your knowledge about interesting tax facts from here and around the world. Let’s see how you do—answers are at the end! 1. Given our British origins, let’s start with a fun English tax fact. What was taxed in England during the 17th century, resulting in an abundance of bald heads? A. Hats B. Hair powder C. Wigs D. Shampoo Answer: C – WigsIn 1795, England taxed wig powder, causing many to stop wearing wigs altogether. 2. Which U.S. president introduced the first federal income tax? A. Abraham Lincoln B. George Washington C. Franklin D. Roosevelt D. Theodore Roosevelt Answer: A – Abraham LincolnThe first federal income tax was introduced in 1861 to fund the Civil War. As promised, after the war ended, so too did the income tax, only to be re-introduced in the early 1900s. 3. What strange item did the IRS allow a bodybuilder to deduct as a business expense? A. Body oil B. Protein shakes C. Tanning lotion D. Ostrich eggs Answer: A – Body oilThe IRS allowed a bodybuilder to deduct body oil as it was deemed ordinary and necessary for his competitions. 4. In which country was a window tax imposed, leading to bricked-up windows in older buildings? A. France B. England C. Germany D. Italy Answer: B – EnglandThe window tax was introduced in 1696, with many homeowners bricking up their windows to avoid the tax. 5. What is the nickname for the U.S. tax system due to its progressive nature? A. Robin Hood Tax System B. Pay-As-You-Go C. Tax the Rich System D. The Graduated Tax Answer: D – The Graduated TaxThe U.S. tax system is called graduated because rates increase with income levels. It is also known as a progressive tax system. 6. What popular children’s activity was taxed in Arkansas in 1990, sparking outrage? A. Playgrounds B. Hula hoops C. Swing sets D. Clown shows Answer: B – Hula hoopsArkansas briefly taxed hula hoops in 1990, considering them a recreational activity. 7. Which of the following pets were successfully deducted as a business expense? A. A cat used for pest control in a junkyard B. A dog trained to sniff out counterfeit money C. A parrot that served as an office greeter D. A goldfish for calming customers Answer: A – A cat used for pest controlA junkyard owner successfully deducted a cat’s care as a business expense. 8. What is the origin of the word tax? A. It comes from the Latin word taxo, meaning I evaluate. B. It derives from Old French taxer, meaning to split. C. It originates from Greek, meaning to take. D. It stems from the ancient Sanskrit word for tribute. Answer: AIt comes from the Latin word taxo, meaning I evaluate. 9. In 2013, which country imposed a tax on people with tattoos in a drive to regulate body art? A. South Korea B. Hungary C. Japan D. Australia Answer: B – HungaryHungary introduced a tax on tattoos and piercings as part of a health-related initiative. 10. What unusual tax was levied by Roman Emperor Vespasian in 70 AD to raise funds for public works? A. A beard tax B. A urine tax C. A laughter tax D. A sandal tax Answer: B – A urine taxEmperor Vespasian taxed urine, which was used in ancient Rome for tanning leather and laundering clothes. How Did You Score? 9–10 Correct: Tax Trivia Master! Are you secretly a tax historian? 6–8 Correct: Impressive! You’ve got a solid grasp on quirky tax facts. 3–5 Correct: Not bad! Your brain knows a bit of interesting tax trivia. 0–2 Correct: You live a wonderful life, unencumbered with unusual tax laws in your memories.