Saturday, March 28, 2015

Social Security Changes: What You Need To Know


About 46 million retired people and their dependents receive Social Security, and the average benefit is around $1,300. If you're reading this, odds are good you either know someone who gets this benefit or are someone who does. What you may not know is that this benefit may be subject to change this year. 

Most experts agree that the Social Security program is in long-term trouble. By 2033, the program will only be able to fund about 75% of its current obligations. By 2083, that level drops to 72%. With these breakdowns in funding looming, changes had to happen. Imagine a current retiree on a fixed income being asked to give up 23% of her monthly check. That would mean poverty and destitution for millions of elderly people. 

Significant overhauls of the program are coming but involve a lot of complicated political maneuvering. In legislative circles, Social Security is known as the "third rail." In subway language, the third rail is the one in the middle that carries all the electricity. If you touch it, you die.

In the mean time, a variety of smaller reforms have been implemented, designed to ensure the short-term survival of the program. In 2015, there are three significant changes to Social Security benefits. Note that most of these changes only apply to future beneficiaries and current recipients will continue to receive a benefit similar to the one they're currently receiving.

If you're worried about how your chances of collecting change, take a look at these three upcoming changes:

1.) Mail-in benefit statements

If your age ends in "5" or "0" in 2015, expect a letter from the Social Security Administration this year. The statement will explain how much you've paid in and what kind of benefit you can expect to receive. The benefit will be estimated based upon several retirement age options, starting with age 65.

The administration suspended mailed statements last year, but restored them for 2015 to allay fears about the short-term survivability of the program. Obviously, the numbers listed in the statement are estimates, but they should provide a helpful guide for those approaching retirement. They expect to send out 48 million statements in 2015.

If you're already receiving Social Security, you'll receive an annual statement unless you've already opted to receive online-only statements. That recipient statement will include the cost of living adjustment for the year, the monthly benefit and any survivor benefit your spouse will receive.

2.) Higher Social Security taxes

One of the biggest problems facing Social Security as a program is a shortage of revenue. The way income is taxed for the program is riddled with exceptions and exemptions. The Social Security Administration can't encourage people to die sooner, but it can collect more revenue to make up for longer life spans.

Previously, employees were taxed on the first $117,000 of income. This year, that amount will be $118,500. To make up for the slightly increased ceiling, the maximum benefit will also increase. For people who wait until age 66 to take Social Security, there will be no maximum to their benefits. Also new this year, people who wait until 66 will receive an additional return on benefits they deferred during their 65th year.

3.) Windfall Elimination Provision

The biggest change facing Social Security is the attempt to correct "double pensioners." People who work government jobs (as well as some kinds of non-government jobs whose salaries are carefully regulated) are enrolled in separate retirement programs outside Social Security. These individuals did not have FICA (the tax that pays for Social Security) deducted from their paycheck. They instead paid into a different retirement system.

Previously, such employees received the same spousal benefits as those who paid into Social Security. They also received additional Social Security benefits if they held a FICA-paying position at another time in their lives. This windfall elimination is the subject of a 1985 regulation that takes effect this year.

This change doesn't affect members of the Armed Forces, whose checks have included FICA deductions since 1957. It also doesn't affect state or federal employees who have FICA deductions from their paychecks. If you're unsure, check your paycheck stub for a line labeled "FICA taxes."

Those who didn't pay in will have their direct benefits reduced by a proportion of their government pension. They will also have any spousal or widower benefits they would have received reduced by a similar amount. These so-called "double-dipping" eliminations will save Social Security $3.4 billion, helping to ensure the program's longevity.

If you're concerned about the availability of Social Security for your retirement, it's never too late to take control of it yourself. Many savings vehicles are available, from savings accounts and certificates to IRAs. To find out what options work best for you, call, click, or stop by Destinations Credit Union today. Our representatives can walk you through all the options and help you get to the retirement of your dreams.

SOURCES:

Wednesday, March 25, 2015

Prior Year Tax Returns



Brought to you by Destinations Credit Union

If you didn't file your taxes for the last couple of years because you didn't think you made enough to pay taxes, what should you do?  You might be missing out on some refunds that you should have had!

"Paying" your taxes can be a misnomer for many folks. This year, 8 out of 10 people who filed taxes got a refund. The average refund was nearly $3,000, according to the IRS.

Many people think of tax refunds as bonuses, but it's really an interest-free loan you gave the government. Filing your taxes is how you collect on that loan. If you don't file, the IRS is only too happy to keep that money.

As a matter of fact, the window is closing on returns from prior years -- with a big chunk of money still left unclaimed. About 1 million taxpayers didn't file 2011 returns and are owed refunds. They have until April 15 to file for 2011 or they lose out on that money for good.

There's quite a bit of money still unclaimed. About $1 billion in total tax refunds are still owed by the IRS. More than half of the refunds are for more than $698, with most of that money earmarked for seasonal or part-time workers. The reason for this is simple. If you only work for part of the year, your employer still "withholds," or pre-pays income taxes, as though you were going to work all year.

Other people who are eligible for refunds include students and families. You may be entitled to a refund from so-called refundable credits. Programs like the Earned Income Tax Credit offer you a tax credit you can get even if you don't owe taxes. The Earned Income Tax Credit provides relief for people with low incomes. Other refundable credits include the Child Tax Credit, which offers refunds of up to $1,000 per child. You might also qualify for the American Opportunity Tax Credit, which offers refunds for tuition and other expenses related to higher education.

Whatever the source, you won't know for sure until you file. If you owed money, the IRS would not be so laid back about collecting, so there's not much chance you'll end up having to pay more. You've got nothing to lose and quite a bit to gain.

Ready to start filing your back taxes? Here are three steps you need to take!

1.) Gather your documents

You'll need all your tax documents from the year for which you're planning to file. Remember, these refer to year you earned, not the year you were supposed to file. Your 2011 tax return was due in April of 2012, but covers what you earned between Jan. 1 and Dec. 31, 2011.

If you've lost these forms, employers are supposed to keep them on file. Few people ever ask for them, so your employer's HR representative may not be used to finding them. The information may also be available online if your employer uses an electronic workforce management system. It might take a few days for your employer to find the appropriate forms, but since you've waited this long, there's no harm in waiting a few more days.

If you can't find your documents, don't guess! Filling in tax forms with incorrect information might be considered tax fraud, especially if you guess low. The IRS might accuse you of fudging the numbers to get more money. Make sure you're only entering accurate information.

2.) Use the appropriate software

Tax rules and rates change from year-to-year. Always check in the upper left-hand corner of the federal forms for the year of the return. You'll want to make sure you're using the forms for the year you're filing.

Most tax filing software will let you file prior years at a discounted rate, but you'll still have to pay for e-filing. In some cases, you can deduct this amount from the refund you'd receive, so you won't have to pay anything upfront. If paying for tax forms is too frustrating, you can always find the forms in the IRS form library.

3.) Plan for the money

It's tempting to think of a tax refund as free money and spend it on a creature comfort or a silly luxury. In fact, the most common decision people make about their tax refund is to purchase a big-screen TV. For many people, this is the biggest influx of cash you'll get all year. Spending it foolishly is a big mistake.

If you don't have a plan for the money, it'll disappear into a thousand momentary indulgences. Make a plan once you see how much you'll get back. Just make sure your plan achieves a goal that's important and impactful to you financially.

A prior year tax return would make a great start to paying down your credit card or other high-interest debts. It would also make a great emergency fund that could keep you out of debt in a crisis situation. This money could also be the start of a retirement nest egg that will get you in the habit of saving.

SOURCES:

Monday, March 23, 2015

Eating Out ... At Home!

Brought to you by Destinations Credit Union.


There's something magical in a kid's mind about going out to eat in a restaurant. They ask for their favorite food and it appears as if summoned by a magic wand. Most of them probably don't even notice the bill at the end, making for an even more enchanting experience.



Tired of financing these family outings? Believe it or not, it's even more entertaining to have a restaurant right in your own home. Besides providing oodles of imaginative fun, this activity can be used to teach skills such as setting the table, preparing food, setting prices, paying the bill and getting the right change.



You can tailor the activity to different ages and make it as elaborate or simple as you want. Deciding ahead of time on a special that everyone will choose to order is highly recommended. They can peruse the other menu items to their heart's content, but the special will be so irresistible, the entire family will choose it that day. Have your child help prepare the special ahead of time so that they will be more invested in ordering it later. You don't want to have to make two or more different dishes!



This doesn't mean you can't come up with a menu with all the options. Have your child help design it using a free online template. An older child can help with pricing. If you have time, it can be especially useful to look up the actual cost of making your menu items at home. If you have less time, look up the costs of making your special. Then, explain how restaurants charge diners a lot more for the same dish.



You can teach your child that menu items can typically have a 300%-500% markup of the dish's actual cost. This is easiest to explain with the example of a $5 glass of soda. Point out that, because they need to pay for delivery of the food, preparation, serving and cleanup, restaurants need to charge customers a lot more than the food is worth to make a profit. Keeping that in mind, figure out the cost of your dinner special.



Provide your child with real or play money. They might want to take the role of waiter and actually set and wait on the table. Of course, in your restaurant, waiters will also have a chance to eat. The waiter will tally up the bill at the end for all the restaurant guests, take payment, and calculate the change that is due.



Alternatively, you can play server. Bill your child at the end of the meal and have him or her pay the bill with the fake/real money you provided them. An older child can be taught to calculate the tip as well.



At the end of the day, everyone will be fed, entertained and hopefully a bit wiser. After all, there's nothing like eating out, especially when you can do it at home.

Friday, March 20, 2015

"ISIS" Hacks Credit Unions - What You Need To Know



ISIS is the new face of terrorism and the Internet is the next front. Terror organizations use social media to recruit members, spread their messages and plan attacks. That they would also use hacking to evoke fear should come as no surprise.



That appears to be what happened on March 9 this year when visitors to the websites of several credit unions did not see the front page they were expecting. Instead, they saw a black screen with the logo for the Islamic State. Under the image were the words "Hacked by Islamic State (ISIS) We Are Everywhere :)" along with a link to a now-defunct Facebook page.



A closer examination of the defacement suggested to the FBI that this was not the work of the international terrorist group. First, the smiley face at the end of the message does not fit the tone of other messages the group has sent. Second, the targets, which included several small businesses and credit unions, seem out of character for the group. Most of the group's rage tends to focus on agents and governments it views as occupying territory in the Middle East. Third, the level of damage was relatively low. A sophisticated hacking operation would aim to debilitate or destroy economically or politically important assets. While taking down a credit union's website for a few hours is certainly disconcerting, the dollar amount of that can be applied to the damage is relatively low.



Rather, the FBI suspects this is the work of fairly unsophisticated domestic hackers. The target selection fits more with an attention-seeking group of malcontents. The strategy of website defacement is popular among amateur computer security students seeking to prove their skills or leave a "calling card." No member data, accounts, or contact information was compromised in the hack and the defacement of the websites has already been reversed.



As with every other security compromise, the possibility that a more serious data breach occurred is not out of the question. In most cases, this breach would involve rigging the website to install malicious software on users' computers. While it is unlikely, precautions are free and an ounce of prevention is worth a pound of cure when it comes to information security. If you're concerned about your computer integrity, take the following four steps.



1.) Install, update, and run security software



Using the Internet without antivirus software is like reaching your hand into a medical sharps disposal bin. You're going to get something and the results won't be pretty. Several free antivirus programs exist. Popular choices include Panda Security, AVG and Avast.



If you already have antivirus software, you might think you're covered. Yet, antivirus programs only protect against specific kinds of malicious programming. While they're certainly the worst of the worst, viruses are only one kind of threat you face on the Internet. You also need an anti-malware program, like MalwareBytes or Spybot. These programs find and remove security threats that, while not quite to the level of viruses, can still compromise your computer.



These programs are still serious threats. Data breaches at Home Depot, Target and others were caused by malware on company computers. Even professional security experts occasionally forget about defending their systems this way.



Once you get the software installed, make sure to keep it updated and run it regularly. The scans usually take between 20 minutes and an hour. That's all it takes to stay safe from the worst threats.



2.) Change your passwords



It appears unlikely that any user data was compromised in this most recent round of hacks. Still, there's no reason not to be cautious. Change the passwords you use to log on to major financial websites and any website where you use those same passwords. If you use your Destinations Credit Union password to access your email, change your email password, too.



It's a good idea to cycle passwords every six months or so anyway. Doing so helps to keep your accounts safe. If you have trouble remembering to do so, consider using a password management service to keep track of your security.



Always choose strong passwords. Four random words with a number on the end is a great way to randomize passwords but keep them somewhat memorable. Just look around your computer area and use the names of the first four objects you see, followed by your birth month. Doing so creates a password that humans can easily commit to memory, but the most powerful computers would take years to crack.



3.) Get a credit score report



You can get a free credit report every year, and it's a good idea to do so. If you're planning to buy a house or a car this year, you might want to hold off and use your free report closer to your purchase date. If you don't have major purchases planned for this year, you can use your free credit score report to check if you've been hacked.



Look for accounts you don't remember opening or large, sudden upswings in debt utilization. These could be signals that someone's compromised your identity. Call the credit reporting bureau immediately to report suspicious activity.



This alleged ISIS hack is nothing to fear, but it's worth being cautious all the same. It's much easier to take preventative action than to regret not having done so. Taking these steps can help ensure you stay safe, no matter what happens.



SOURCES:




http://www.cutoday.info/Fresh-Today/Hackers-Claiming-To-Be-ISIS-Take-Down-CU-s-Site