Take Note: Spring is Also Tax Fraud Season
April 13, 2021
Spring is tax season, but did you know it’s also tax fraud season? Con artists love this time of year, because they have identified so many opportunities to steal personal information, file fraudulent tax returns, swipe refunds, and more.
This is not a new thing, but our growing dependence on digital systems has made the situation more difficult. It’s important to be on guard against identity theft always, but especially at this time of year, and especially in light of the opportunities offered by increasingly sophisticated technology.
To protect yourself, take the following steps:
- Visit irs.gov and request a one-use PIN code to file your taxes
- File early in the season, rather than waiting until the last minute
- If you send documents digitally, use a secure file transfer service
- Move sensitive tax-related data from your computer to an external drive, and then delete those files from your computer or any other device that connects to the internet
- Erase old drives, phones, and other devices before discarding them
- Don’t open links or PDF files in emails; call the sender to verify first
- If you submit PDF files digitally, use the password function, and ask your tax preparer to take this step as well
- Don’t fax documents to anyone without first verifying their identity and the correct fax number
- Never reply to anyone who requests sensitive tax information over the phone or email
Perhaps the most important rule to remember is that the IRS does not call or email anyone to request information or report problems with tax returns. Any time there is a problem, they will send you a letter in the mail. Hang up the phone or delete emails that appear to be requesting sensitive information. Yes, even if your caller ID or email service displays “IRS” or “US government”. Scammers know how to trick those systems.
Finally, if you ever receive an unexpected refund from the IRS, call them to inquire about it. It can certainly be difficult to keep track of these things, in light of all the stimulus payments that are going out right now. Sometimes scammers file fraudulent returns and allow you to collect the “refund”. Then they call, pretending to be the IRS, demanding that you wire the money back to them.
If you have any other questions about financial planning or keeping your money safe, call our office and we’ll be happy to help.
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Long-term care is one of the most overlooked yet potentially costly aspects of aging. Whether it involves in-home assistance, assisted living, or nursing home care, the expenses can add up quickly. Without proper planning, these costs can eat away at your retirement savings and leave little behind for your spouse or loved ones. The good news is that there are smart ways to fund long-term care without draining your assets. Understand the True Cost of Long-Term Care According to Genworth’s 2023 Cost of Care Survey, the median annual cost of a private room in a nursing home is over one hundred thousand dollars. Even in-home care services can cost upwards of sixty thousand dollars a year, depending on the level of care needed. These numbers highlight the importance of planning ahead before a health crisis forces quick and expensive decisions. Explore Long-Term Care Insurance Long-term care insurance is a traditional option that helps cover the cost of care when you are no longer able to perform basic daily activities. These policies can help protect your retirement savings and give you more flexibility in choosing where and how you receive care. It is best to apply for coverage when you are in your fifties or early sixties since premiums tend to rise with age and health conditions can make you ineligible. Consider Hybrid Insurance Policies If you are concerned about paying premiums for something you may never use, hybrid policies offer an appealing alternative. These policies combine life insurance with long-term care benefits. If you end up needing care, a portion of the death benefit is used to cover those costs. If you never use the long-term care portion, your heirs still receive a life insurance payout. This can be a smart way to protect both your future and your legacy. Use a Health Savings Account (HSA) If you have an HSA, it can be a valuable tool for long-term care planning. Funds in an HSA grow tax free, and withdrawals used for qualified medical expenses are also tax free. While HSAs cannot pay for insurance premiums directly, they can help cover out-of-pocket care costs, including in-home services, adult day care, and even nursing home expenses. Create an Irrevocable Trust For those concerned about preserving assets for their heirs, setting up an irrevocable trust can be a powerful strategy. By transferring assets into this type of trust, you may protect them from being counted when applying for Medicaid. This type of planning must be done well in advance, as Medicaid has a look-back period that can disqualify you if assets are transferred too close to the time of application. Leverage Annuities for Long-Term Care Needs Certain annuities are designed to generate income while also providing enhanced payouts if long-term care becomes necessary. These products can offer a consistent income stream during retirement and a larger benefit if your health declines. They are especially appealing for individuals who want both growth potential and added protection against care costs. Consult with Your Insurance Professional The best approach to funding long-term care depends on your unique situation, including your health, financial goals, family structure, and available resources. Give us a call, and we can help you explore your options and build a personalized strategy to protect your wealth and your well-being. Long-term care planning is not just about money. It is about making sure you maintain your dignity and independence as you age. With the right plan in place, you can meet the challenges of aging without sacrificing everything you have worked so hard to build.
