October 2017 - Tax Tips & Advice

Equifax Data Breach, Hurricanes and Scams

There are many important issues happening around our nation that might be affecting you or your loved ones. We believe it important to inform you of how these concerns might affect your taxes and what actions you should be taking. Please share this information with your friends and family.

Equifax Data Breach

The Equifax data breach has affected more than 143 million people. As per the Federal Trade Commission, there are ways to find out if you were affected by the breach, and steps to take to protect yourself.

  1. First determine if you were affected by visiting www.equifaxsecurity2017.com. Click on “Potential Impact” and enter your last name and the last six digits of your Social Security number.
  2. Check your credit report by visiting annualcreditreport.com. Accounts or activity that you don’t recognize could indicate identity theft.

If you believe you were affected by the Equifax data breach:

  1. Visit Identitytheft.gov/databreach to learn more about protecting yourself after a data breach.
  2. Consider placing a credit freeze or fraud alert on your files. A credit freeze makes it harder for someone to open a new account in your name. A fraud alert warns creditors that you may be an identity theft victim, and that they should verify that anyone seeking credit in your name really is you.

Even if you do not believe you were affected by the data breach, it is still good practice to follow these tips to help protect against identity theft:

Monitor your existing credit card and bank accounts closely for charges you don’t recognize.

File your taxes early before a scammer can. Tax identity theft happens when someone uses your Social Security number to get a tax refund.

Hurricane Losses

There has been much devastation in our country with Hurricane Harvey and Hurricane Irma, and hurricane season is not over yet. If you have been affected by these recent disasters, you may be eligible for some of the various forms of assistance that are available. This assistance can be in the form of tax deductions taken as casualty losses on your tax return, or federal disaster assistance. It is important to seek the assistance of a tax professional when determining tax effects due from natural disasters.

Your loss is generally the lesser of: (1) your basis in the property or (2) the decrease in the property’s fair market value. If you have the original receipts from when you purchased the property, they can be used to establish the property’s basis. Also, the cost of cleaning up or making repairs to restore damaged property to its original condition can sometimes be used as a measure of the loss of the property’s value. It is important to keep receipts and documentation of all expenditures. However, if the loss is significant, we recommend hiring a competent independent appraiser to establish the property’s value before and after the casualty.

The tax law allows you to claim an itemized deduction for casualty losses relating to personal assets that are not reimbursed by insurance. You must first reduce your loss by $100 and then by 10% of your adjusted gross income (AGI). Any remaining loss is claimed as an itemized deduction on Schedule A of Form 1040.

It is important to note that when you receive insurance reimbursements, there is a chance that you could have a taxable gain on your tax return. If this could be your situation, please contact us to discuss how this would affect your tax return.

Scams and Identity Theft

The IRS is warning us about many fake charity scams emerging due to Hurricane Harvey. It is important to seek out a recognized charitable group when making donations.

Be sure to donate to recognized charities.

Be wary of charities with names that are similar to nationally known organizations. Some phony charities use names that look like respected, legitimate organizations.

Don’t give out personal information to anyone who solicits a contribution.

Never give or send cash. For tax record purposes, contribute by check or credit card.

Per a recent IRS alert, there is a new phishing scheme that impersonates the IRS and the FBI as part of a ransomware scam to take computer data hostage. The scam email uses the emblems of both the IRS and the FBI. It tries to entice users to select a “here” link to download a fake FBI questionnaire. Instead, the link downloads a certain type of malware called ransomware that prevents users from accessing data stored on their device unless they pay money to the scammers.

Victims should not pay the ransom and should immediately report any ransomware attempt or attack to the FBI at the Internet Crime Complaint Center, IC3.gov.

Forward any IRS-themed scams to phishing@irs.gov.

The IRS does not use email, text messages or social media to discuss personal tax issues, such as those involving bills or refunds. For more information, visit the “Tax Scams and Consumer Alerts” page on IRS.gov.

Conclusions

There may be questions and financial decisions that need to be answered going forward. Please give us a call if you want more information about anything covered in this letter, or if you have any other questions.

Also, please feel free to pass along our firm contact information to anyone you know who may benefit from our experience and expertise. We are here to help.


This general information should not be acted upon without first determining its application to your specific situation. For further details on any information, please contact us.