Monthly Archives: March 2018

The Dreaded Income Tax

This year, for the first time in my life, I’ve joined the ranks of the income tax procrastinators.  It’s a lot more complicated since my husband became an independent contractor, so I’ve kind of been dreading it.  And I long for the days when I only had W-2 income and I could have done it in my sleep.  If you haven’t started thinking about filing your income tax yet, it’s probably time.  I, like many, hate the process, so don’t feel bad if you do too.

I’m thankful that there is lots of help out there.  There are a couple of different options to get help with your taxes:  in person or in the form of computer software.  Many people just run in fear from the idea of taxes and assume their best option is to go to the local tax prep office and have somebody else do it.  This is going to be a pricey option.  If your tax picture is simple (e.g.: standard deduction and just wages and interest for income) there’s absolutely no reason to pay someone else to do this for you.  You can easily do it yourself.  If you have itemized deductions and capital gains, it’s a little more complicated, but you should still be able to handle it with the help of a computer program.  You can find a list of several good ones here.

Please remember that if your adjusted gross income for 2017 is less than $66,000 you are able to e-file and receive tax preparation assistance at no charge.

Also, keep in mind that you may be eligible for some educational tax benefits.  You should soon be receiving your Form 1098-T from the University (or you can find it on LionPath in the Financial section.  This will help you to calculate your eligibility for these benefits.

The Lifetime Learning Credit is a tax credit of up to $2,000 available to individuals who file a tax return and owe taxes.  This credit is subtracted from your tax liability, reducing the total amount of federal income tax you pay.  In order to claim this credit, you will need to complete and submit IRS form 8863 with your federal tax return.

If your income is too high to allow you to claim the Lifetime Learning Credit, you may qualify for the Tuition and Fees Tax Deduction of up to $4,000.  This is an “above the line” deduction, which means you do not need to itemize your deductions in order to claim it.  You can find this deduction on line 34 of your 1040 or line 19 of your 1040A.  The required supporting form is available online.

Additionally, student loan interest is an “above the line” tax deductible expense.  If you paid any student loan interest in 2017, you may be able to claim the Student Loan Interest Deduction.  You can find this deduction on line 33 of your 1040 or line 18 of your 1040A.

If you would like to learn more about tax benefits for education, you should reference the IRS publication on these benefits.

Filing income tax can be intimidating.  So many forms!  Federal! State! Local!  Numbers! (I’ve never met anyone who came to law school because they love math.)  But you are all smart enough to do it without having to pay someone or to lean on your parents for help.  Give it a try!  You’ll be surprised at how easy it can be once you get past the initial fear.  And the sense of accomplishment you’ll feel when you are done will be great!

 

Are You Prepared to be Hacked?

My best friend had her bank account hacked last week.  It was likely a skimmer that got her debit card number.  They managed to drain her of over $1,000 before the bank caught it and shut down the card and the account.

On the surface this isn’t a huge deal.  Her credit union is going to make it right and restore all of her funds.  But in the short term it’s turned into a bit of a nightmare for her.  There is a bit of a process involved in getting the funds back and getting a new bank account, new debit card, and new checks.  In the meantime, there are bills to be paid.  She can’t access cash through an ATM.  She can’t write a check.  And the money she had in her savings (thank goodness!) is having to cover her for the time being.  If that little bit of savings weren’t there she would be in an even bigger mess.

I like to protect myself against situations like this by using a credit card rather than a debit card for everyday purchases.  When a credit card is compromised (which has happened to me several times), they shut off the card, refund the fraudulent charges, and send a replacement card.   Not a big deal.  I just have to use a different card in the meantime.  And I do have a backup card, so not a problem.

I asked my friend why she was using debit instead of credit, and she said she doesn’t trust herself not to charge up a credit card.  She budgets best by using debit.  And it’s great that she knows that about herself.  But she left herself with very little protection for this situation.  She doesn’t have a backup plan.  She has her savings, but no easy way to make payments on bills that are coming due this week.  She may have to lean on her friends to make payments for her by check or by card until she is able to get herself restored.

What would you do if you didn’t have access to your checking account and bills were coming due?  Do you have a backup plan?  A second checking account?  (Yes…I have one of those, too).  A credit card you can turn to in emergencies?  It’s worth thinking about.  Hacks and fraudulent charges happen.  And banks protect you from them.  But you should always be prepared just in case.

Fun with Phone Scams

It seems that telephone scams are alive and well even in this digital age.  Several times a week I’ll get a phone call (on my cell phone) from a number I don’t recognize.  Sometimes I don’t answer.  Sometimes I do.

Recently I decided to answer one of these calls and ended up listening to a computer voice tell me that this was my last chance to save money on my student loans before certain federal programs end.  Since my student loans have been paid off for a very long time, and I also happen to know more than a little about federal student aid programs (such as that no federal student aid programs are currently scheduled to end), I decided that I would try to have a little fun.

The computer voice told me to press 5 if I knew my FSA ID or 8 if I needed help retrieving it.  So this was a cue to me that the mission of this scammer was likely to get my FSA ID and use that to retrieve other private information about me (like my Social Security number and birth date).  I pressed 5 and then was put on hold for a minute or so.  This seemed weird since I was on the receiving end of the phone call.  But I held.  I wanted to play.  Eventually I was greeted by someone who asked if I was having trouble making my student loan payments.  I said that no, that wasn’t really a problem, and then they promptly hung up.  But much to my delight, they called back just a few minutes later, so the game could continue.  I pressed 5 and waited my turn again.  And this time the voice on the other end asked me if I had student loans.  I said that I assumed they knew I did, since they had called me about this issue.  Again…a hang up.

The student loan people have not called me back since that day.  My game wasn’t much fun.  I’ve had financial aid administrator friends keeps folks like this on the line for up to half an hour.  My experience pales by comparison.  But the message was received.  Phone scammers are out there, disguised as student loan consolidators.  Beware if you get a call from these folks.  They are not trying to help you.  And if you do have questions or concerns about your student loans, your answers are best found with either your loan servicer or your friendly neighborhood Financial Aid Director in suite 105 of the Katz Building.  And never give out any personal information on a telephone call you did not initiate.