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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.
As a business owner, safeguarding your enterprise against unforeseen events is crucial for long-term success. Life insurance offers several strategies to protect your business, ensure continuity, and provide financial stability during challenging times. Two primary methods are buy-sell agreements and key person insurance. Buy-Sell Agreements A buy-sell agreement is a legally binding contract that outlines the procedure for transferring ownership if an owner departs due to death, disability, or retirement. Funding this agreement with life insurance ensures a smooth transition and financial security for the remaining owners and the departing owner's beneficiaries. Types of Buy-Sell Agreements Cross-Purchase Agreement: Each owner purchases a life insurance policy on the other owners. Upon an owner's death, the surviving owners use the policy proceeds to buy the deceased owner's share. This method is often suitable for businesses with a few owners. Entity Purchase Agreement: The business itself owns life insurance policies on each owner. If an owner passes away, the business uses the proceeds to buy back the deceased owner's share, redistributing it among the remaining owners. This approach is typically preferred for businesses with multiple owners. Key Person Insurance Key person insurance is a policy that a business takes out on essential employees whose loss could significantly impact operations. The business owns the policy, pays the premiums, and is the beneficiary. If a key person dies or becomes disabled, the policy proceeds can be used to: Cover the costs of finding and training a replacement. Offset lost revenue resulting from the key person's absence. Reassure clients, creditors, and investors of the business's stability. This strategy is vital for businesses where certain individuals are integral to success, such as top executives, lead developers, or primary sales personnel. Additional Strategies Beyond buy-sell agreements and key person insurance, consider these life insurance strategies: Collateral Assignment: Use a life insurance policy as collateral for business loans. In the event of the owner's death, the lender is paid from the policy proceeds, preventing financial strain on the business. Executive Bonus Plans: Provide key employees with life insurance policies as part of their compensation package. This not only offers them personal financial protection but also serves as an incentive for retention. Deferred Compensation Plans: Promise to pay key employees a certain amount at retirement, funded through life insurance policies. This ensures the business can meet its obligations without affecting cash flow. Implementing life insurance strategies is essential for business owners aiming to protect their enterprises from unforeseen events. Work with us to explore your life insurance options and we can help your business remain resilient and continue to thrive.
Term life insurance provides coverage for a specified period, such as 10, 20, or 30 years. If you outlive your term policy, the coverage ends, and no death benefit is paid to your beneficiaries. As you approach the end of your term, it's essential to evaluate your current financial situation and consider options to maintain life insurance coverage if needed. Options to Consider Annual Renewable Term: Some term policies offer an option to renew annually after the initial term expires. While this allows you to extend coverage without a medical exam, premiums typically increase each year based on your age, making it a potentially costly option over time. PROGRESSIVE.COM Policy Conversion: Term-to-Permanent Conversion: Many term policies include a conversion feature, allowing you to convert your term policy into a permanent life insurance policy, such as whole or universal life, without undergoing a medical examination. This option can provide lifelong coverage and build cash value, but premiums will be higher than those of the original term policy. NEWYORKLIFE.COM Purchasing a New Policy New Term Policy: Applying for a new term life insurance policy can be an option, especially if you're still in good health. However, premiums will be higher due to increased age, and you may need to undergo a medical exam. Permanent Life Insurance: Alternatively, you might consider purchasing a permanent life insurance policy, which provides lifelong coverage and accumulates cash value. This option is generally more expensive but offers additional benefits. Exploring Alternative Coverage: Final Expense Insurance: Designed to cover end-of-life expenses, such as funeral costs and medical bills, final expense insurance offers a smaller death benefit with more affordable premiums and may not require a medical exam. Guaranteed Universal Life Insurance: This type of policy provides coverage for a specified age (e.g., up to age 90 or 100) with lower premiums compared to whole life insurance, focusing primarily on the death benefit without significant cash value accumulation. Take Action Now As your term life insurance policy nears its expiration, assess your current financial needs and health status to determine the most suitable course of action. Consulting with an insurance professional can help you navigate your options and select the best solution to ensure continued financial protection for your loved ones.
