Wednesday, February 17, 2010
Tips for Avoiding an IRS Tax Audit,
How to Avoid Debit-Card-Skimming Scams,
Congratulations to This Month's Winner,
Positive Economic Update,
Network with Orion
Tips for Avoiding an IRS Tax Audit
History has shown that less than 1% of those filing taxes will be audited. Most of the time, audits are chosen on a random basis; however, there are some things that will immediately put a red flag on your return. Here are some easy tips for avoiding an audit:
• Check and double-check your math – Bad math is listed as one of the top mistakes made by those filing their taxes according to the IRS. Making mistakes on your tax return will definitely get you noticed, and not for good reasons. Most of the time, the IRS will correct the mistake and send you a bill. However, too many mistakes will make them take a very close look at your return. Making mathematical errors can also delay your return.
• Don’t Overestimate Donations – To encourage giving, the IRS offers a deduction for donations. For the most part the taxpayer has to estimate what the value of the donation was. As a general rule of thumb, the IRS likes to see a range of 1%-30% of the original value. Another helpful hint is to have the donated items appraised, especially bigger ticket items.
• Under Reporting Income – Failure to report any income, including the sale of property, will immediately catch the attention of the IRS. Of course, they may not always notice, but ask yourself if it is worth the high penalties and fees that you will have to pay if you get caught?
• Not Including Your John Hancock – An easy mistake to make that will get you noticed is forgetting to sign the return. The IRS will surely wonder what else is missing and if you didn’t sign the return on purpose.
• Make Too Much – Okay, this is not really preventable, but be prepared to be at higher risk for an audit if you make over $100,000 each year. This risk gets higher for each $100,000 you make. So this isn’t really a tip so much as a “be aware” warning.
Audits have and will continue to be part of the IRS system for years to come. Unfortunately there will be those who haven’t done anything but will neec to endure the “tax audit process”. Keep in mind, though, that the intent of an audit is to stop those who are cheating the system and make the taxing process as fair as possible.
PLEASE NOTE: Orion ICS, LLC, its affiliates and its employees are not in the business of providing tax or legal advice to any taxpayer. This content is for general information purposes only, and is not intended or written to be used without the advice of the taxpayer’s independent tax advisor.
How to Avoid Debit-Card-Skimming Scams
Businessdictionary.com defines “skimming” as, “the illegal practice of taking money from cash receipts for personal use,” or “a type of fraud in which the numbers on a credit card are recorded and then transferred to a duplicate card.” In other words, thieves are able to access your personal financial information through your financial transactions.
Skimming is becoming more commonplace, and it happens in places people would never suspect. Perhaps it is not entirely avoidable, but here are some suggestions for protecting consumers from skimming scams:
• Avoid using debit card pin numbers at the gas pump. There are only a few gas pump manufacturers and thousands of employees at those companies who have access to personal debit card information. One bad employee can easily wreak havoc.
• Try to use ATM machines at banks and nowhere else. Skimmers have to be able to access the machine with a special device to gather data. This is more easily accomplished at freestanding ATM machines and at locations such as airports, bars and restaurants.
• Be wary of changes. If the ATM machine seems off in color or there appears to be something glued into the card reader, be sure not to use it and notify the machine owner promptly.
• Monitor personal banking information. This is something that should be done in any respect. According to an article on Yahoo finance, “federal law limits your liability for fraudulent debit-card charges to $50, but only if you report the theft or loss of your card or PIN within two business days of discovering the problem. If you fail to report unauthorized charges within 60 days of the date the statement listing those charges was mailed, you could be liable for any unauthorized withdrawals afterward, including the full value of credit lines or savings accounts linked to your account for overdraft protection.”
If fraud is suspected, the bank must investigate and a person’s funds won’t be replenished until the investigation is complete. For this reason alone, it is critical to be a responsible consumer and be vigilant at all times.
Congratulations to This Month's Winner
Positive Economic Update
The economy took a surprising turn and generated unexpected fourth quarter growth. It was the fastest the economy has grown in the fourth quarter in the past six years. Gross Domestic Product, a crucial measure of the US economy, soared at a 5.7% annual rate.
Much of the growth was due to companies reducing inventories more slowly than in the past and increased spending. Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh stated, “The data shows that the necessary transition from government stimulus to private sector spending is under way, which is essential to sustain the economic expansion.”
Economists were also stunned when the unemployment rate dropped to 9.7% in January. It was expected to remain in the double-digit range for the first part of 2010, so the drop came as an unexpected surprise. There are, however, nearly 15 million Americans out of work, and those who have been on unemployment for 27 weeks or longer climbed to 6.3 million. This proves the threat of unemployment still lingers, and we aren’t out of the woods yet.
Additional positive reinforcement came when the International Monetary Fund (IMF), an international organization that monitors global financial entities, said that China and other Asian economies are driving a worldwide recovery at a stronger than anticipated rate. Japanese and US economies are still, however, recovering more slowly. The IMF did caution that a second recession is still possible and that world economies continue to be delicate.
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