Liz Weston

November 25, 2014 By Liz Weston

An IRS impersonator just called me

Here’s the voicemail he left me (in a rather heavy Indian accent):

“I am Jonathan Knight and I am calling you from the federal investigation department of IRS. My badge number is 46719. The matter at the hand is extremely time sensitive and urgent as after audit we found that there was a fraud and misconduct on your taxes which you are hiding from the federal government. This needs to be rectified immediately so do return the call as soon as you receive the message on my direct line number. And this is Jonathan Knight again federal investigation department of IRS.”

I was really rather bummed that I’d let this particular gem go to voice mail. Oh, the fun I could have had with this idiot! Here’s me, pretending to be all scared and upset…drawing him in, getting him all excited about the money he was going to scam from me…and then Boom! Telling him exactly what I thought of his morals, his conduct, his parentage and what bug he’ll be incarnated into the next go-round.

I did call the number back and got a different gentleman with an Indian accent on the line (with the noise of a call center in the background). He called himself “Chief Ray Parker” and told me that “complete audits” of my tax returns from 2002 to 2012 had turned up “errors and miscalculations” and that the government was going to the courthouse to file a lawsuit against me within two hours. When he demanded to know if I had a lawyer and I said yes, though, he didn’t seem to know what to say next, and hung up on me. So I didn’t get to unleash at all.

The IRS says this a pervasive, aggressive scam that’s hitting taxpayers all over the country. The scammers alter their caller ID to make it look like it’s coming from a Washington D.C. number and may know a lot about the people they’re calling. Unfortunately, too many people take the bait and give up sensitive personal information or even money to these scoundrels.

Just as a refresher: the IRS typically contacts taxpayers by letter, not by phone, particularly if an audit is involved. If the IRS thinks you owe money, it will let you know and give you some time to make payment arrangements. Oh, and by the way, the IRS is one of the few creditors that doesn’t need to go to court to get a wage garnishment.

If you get one of these calls, report it to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or at www.tigta.gov. Even if you don’t, tell your parents and grandparents about this since older people may be more vulnerable to these kinds of scams.

Filed Under: Liz's Blog Tagged With: IRS, IRS impersonation scams, IRS impersonator, scams, Taxes, TIGTA, Treasury Department

November 25, 2014 By Liz Weston

Tuesday’s need-to-know money news

Today’s top story: How to prepare for a credit check. Also in the news: What you should include in your long term care plan, how to avoid holiday shopping scams, and why you should purchase renters insurance before the holidays.

How to Get Ready for a Credit Check
Three steps to help you prepare.

4 Things to Include in Your Long-Term Care Plan
Planning for a long life.

Consider Buying Renters Insurance Before the Holidays
Accidents are more common around the holidays.

Beware of Holiday Shopping Scams, FBI Warns Consumers
Beware of too good to be true deals.

Top 10 Reasons to Give Thanks to Your Financial Advisor
In the spirit of Thanksgiving.

Filed Under: Liz's Blog Tagged With: credit check, financial adivsors, holiday scams, long term care plan, renters insurance

November 24, 2014 By Liz Weston

Black Friday: Fun, hype–or class warfare?

American shoppers seem to fall into two groups: those who are planning their early-morning raids on major retailers (starting as early as Thanksgiving morning!) and those who sneer at people who head out into the cold in search of bargains.

I used to belong to the latter group, until a friend pointed out I was being a snob. Here’s how Los Angeles Times reporter Shan Li puts it in today’s article “Black Friday highlights the contrast between rich and poor.”

“Increasingly, the seasonal shopping surge has become a window into America’s class divide, in which high earners have benefited from a booming stock market and rising home prices as many others still grapple with stagnant incomes and lingering financial anxiety.

…

“You have people who really need a bargain — they will sit out for two days to get that deal because that may be the only big thing they can afford for the whole family,” said Britt Beemer, founder of America’s Research Group. “Luxury retailers don’t do very well on Black Friday because their customers are not going to fight the crowds.”

Li quotes a PricewaterhouseCoopers report that says the ranks of strapped shoppers who earn less than $50,000 a year are growing from 63 percent of American shoppers two years ago to 67 percent today.

There are alternatives to fighting the crowds, of course. Check out this interesting post at the Nonconsumer Advocate: “10 ways for a zero-dollar Christmas.” Online retailers are offering plenty of good deals as well. Then there’s the whole Shop Small thing, although you need an American Express credit or Bluebird prepaid card to get money back.

If you are planning to venture out in search of deals, consider a good price comparison app such as RedLaser or PriceGrabber on your smart phone, if you have one. They’re good tools to help you figure out which Black Friday bargains are the real deal. A site to track is DealNews, which not only alerts you to deals but which keeps track of previous low prices. If you can’t check prices on the go, at least hang on to your receipts so you can exchange anything for which you find a better buy.

Those of us who will be sitting snug at home shouldn’t feel too self-satisfied, particularly if–like me–you order a lot from a certain online retailer. Read this Motley Fool article about which retailer treats its employees worse: WalMart or Amazon.

Filed Under: Liz's Blog Tagged With: Amazon, American Express, Black Friday, incomes, shopping, WalMart

November 24, 2014 By Liz Weston

Monday’s need-to-know money news

Today’s top story: The three things you should do before tackling your student loan debt. Also in the news: Three tax changes for 2015, how to protect your finances during a late-in-life divorce, and how changing the order in which you deduct from your paycheck could save you more money.

3 Things to Do Before Tackling Your Student Loan Debt
There’s a lot to do before you start making payments.

3 Tax Changes for 2015 You Need To Know About
Tax time is right around the corner.

Protect finances in later-in-life divorce
Divorce after 50 can come with a special set of financial issues.

Subtract Savings from Your Salary Before Expenses to Save Better
Subtracting your savings first could help keep your expenses in check.

7 Ways to Boost Your Credit Score This Month
Just in time for the holidays.

Filed Under: Liz's Blog Tagged With: couples and money, Credit Score, Divorce, Savings, Student Loans, Taxes

November 24, 2014 By Liz Weston

Q&A: Social Security and same-sex marriage

Dear Liz: My partner of 30 years recently died. Am I eligible for Social Security survivor benefits? I don’t want anything I don’t deserve, but if I’m entitled to something, every penny would be appreciated. I am 54 and make minimum wage.

Answer: Your eligibility for Social Security benefits as a spouse depends on three factors: whether your state recognizes same-sex marriages, whether it did so on the date your partner died and whether you were legally married. (You wrote “partner” rather than “spouse,” which suggests you may not have been.)

The Supreme Court paved the way for Social Security to offer same-sex benefits when it ruled parts of the federal Defense of Marriage Act unconstitutional last summer. Social Security has taken the position that it must follow state law in recognizing same-sex marriages and that what matters is where the couple live, not where they married. Even in states where same-sex marriage is currently legal, Social Security denies survivor benefits if it wasn’t legal when the spouse died.

If you are eligible, you can start receiving benefits as early as age 60. (Survivor benefits are available at any age if the widow or widower takes care of a child receiving Social Security benefits who is younger than 16 or disabled.)

Starting early reduces your survivor benefit significantly compared with what you would get if you wait until your full retirement age of 67. As a survivor, though, you’re allowed to switch to your own benefit later, if that benefit is larger. (That’s different from spousal benefits, where spouses are precluded from switching to their own benefits if they start getting Social Security checks before their own full retirement age.) If your survivor benefit is likely to be larger than any benefit you’ve earned on your own, though, it typically makes sense to delay starting Social Security as long as possible to maximize what you’ll get.

Filed Under: Q&A, Retirement Tagged With: q&a, same sex marriage, Social Security, survivor benefits

November 24, 2014 By Liz Weston

Q&A: Student loan forgiveness and taxes

Dear Liz: You recently wrote about student loan forgiveness. After 15 years as a public defender, my wife was diagnosed with multiple sclerosis and could no longer pursue her career as a lawyer. She applied for forgiveness of the federal student loans she used to attend law school. About three years later, the loans were forgiven. The caveat is that she was required to pay income taxes based on the balance that was erased. The taxes amounted to $63,000. Getting the loan forgiven was easy compared with coughing up the money for the IRS. I thought this should be mentioned.

Answer: The IRS generally considers forgiven or canceled debt as income to the borrower. There are several exceptions, however.

Borrowers don’t have to pay income taxes on student loans forgiven through programs that require them to work for a specific number of years in a certain profession. So public service loan forgiveness, law school repayment assistance, teacher loan forgiveness and the National Health Service Corps’ loan repayment program won’t trigger taxes. Forgiven debt also may be excluded from income if the borrower was insolvent at the time.

Student loan discharges for death, disability, closed schools, false certification and unpaid refunds typically are considered taxable income, however. Forgiveness of remaining balances under income-based repayment programs after 20 or 25 years of payment is also considered taxable.

The taxes owed will be a percentage of the amount forgiven, based on your tax bracket. If you’re in the 25% federal bracket, for example, you’d pay $25,000 for $100,000 of forgiven debt, plus any state and local income taxes. It’s less than the tab you owed, of course, but as you note it can still be a tough bill to pay.

Filed Under: Q&A, Student Loans, Taxes Tagged With: q&a, student loan forgiveness, Student Loans, Taxes

November 24, 2014 By Liz Weston

Q&A: The stigma of bankruptcy

Dear Liz: Someone recently asked you about whether they were responsible for their mother’s credit card debt, and at the end of your answer you suggested she talk to a bankruptcy attorney. How can you promote that kind of irresponsibility?

Answer: Some people are quite firm in their belief that bankruptcy should never be an option — even for elderly widows on fixed incomes with no hope of ever paying off their debts. But if enough things go wrong in their lives, these anti-bankruptcy folks might find themselves grateful that there’s a legal way out of the debtors’ prison that their lives would become.

Filed Under: Bankruptcy, Q&A Tagged With: Bankruptcy, q&a

November 21, 2014 By Liz Weston

Friday’s need-to-know money news

Today’s top story: A little known tax credit could save future retirees money. Also in the news: How to avoid overspending during the holidays, making the right upgrades when selling your home, and how to maximize your Social Security benefits.

The Crucial Tax Credit Retirement Savers Don’t Know About
Your 401(k) contributions could save you money come tax time.

Watch out! 11 ways retailers get you to overspend
Retailers have their eyes on your wallet for the holidays.

Know Your Market When Doing Home Upgrades To Increase Value
Investing in the right improvements.

How to Maximize Social Security for Your Retirement
When you decide to start taking benefits can make a huge difference.

5 Ways to Whip Your Budget Into Shape for the Holidays
The holidays don’t have to leave you broke.

Filed Under: Liz's Blog Tagged With: 401(k), holiday shopping tips, home improvements, real estate, Retirement, Social Security, Taxes

November 20, 2014 By Liz Weston

Thursday’s need-to-know money news

Today’s top story: How to prepare your finances for the end of the year. Also in the news: Strategies to prevent holiday shopping binges, why your employer wants you to save for retirement, and what to do as you approach retirement.

5 Year-End Personal Finance Tips
Preparing for the new year.

3 Strategies to Prevent a Holiday Shopping Binge
Keeping the festivities in check.

The Surprising Reason Employers Want You to Save for Retirement
It’s all about productivity.

5 things to do now if you’re near retirement
Start preparing for one of life’s biggest changes.

7 Money Myths About Millennials
Millennial mythbusting.

Filed Under: Liz's Blog Tagged With: 401(k), holiday shopping, millennials, Retirement, tips

November 19, 2014 By Liz Weston

Wednesday’s need-to-know money news

Today’s top story: Beware the dirty tricks of student loan collectors. Also in the news: Tax tips, the best strategy for holiday shopping, and busting some digital banking myths.