Tax and Financial Planning
The Importance of Tax Planning
Careful planning throughout the year can assist you in reducing the taxes you pay – as well as help you achieve your financial goals. This brief guide provides a basic overview of some of the tax rates, credits, deductions and related considerations that may apply to you.
Income tax planning should not be done in isolation, but instead should be driven by your overall financial goals and integrated with your total financial plan. By developing and implementing appropriate strategies to lessen or shift current and/or future tax liabilities, you can improve your prospects of meeting both long- and short-term objectives. For example, accurately projecting your income taxes can help you determine the cash flow available to you in the coming year.
Keep in mind that tax laws are often complex and frequently change. As a consequence, you should be sure to consult the appropriate professional before making investment and/or tax decisions.
While year-round tax planning is important, you may find extra benefits by gathering all your tax-related facts as the year ends. You may, for example, have a clearer picture of your capital gains and losses, as many mutual fund companies issue distribution estimates by mid-December. The end of the year is a fine time to:
- Examine your portfolio’s asset allocation
- Rebalance your portfolio, if warranted
- Assess holdings (Are they performing as expected?)
- Add up tax-loss harvesting possibilities
- Max out contributions to 401(k)s or other tax-advantaged retirement accounts
- Make last-minute charitable donations
- Pay deductible taxes for 2011 early, if it helps reduce adjusted gross income
- If the alternative minimum tax applies to you, take AMT-appropriate actions
Investors should consult a tax professional about their specific situation.
2011 Income Tax Changes
Americans will not see rate changes on their taxes for 2011 due to the passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 on December 16, 2010. The bill extends the Bush-era tax cuts that were scheduled to expire after 2010 and would have affected virtually all aspects of tax code. The new law extends the cuts through 2012. Here are some key topics of which you should be aware:
Qualified Charitable Distributions
The Qualified Charitable Distribution rules are back. The rule allows a person over 70 ½ to distribute up to $100,000 per year tax free. The distribution is per IRA owner or beneficiary, and the check has to be payable directly to the eligible charity. The provision is extended through 2011.
The estate tax has been revived and is reunified with the gift taxes. The maximum tax rate is 35% with an applicable exclusion amount of $5 million for 2011 and 2012.
The modified carryover basis rules are once again replaced with the step up in basis rules that had applied until 2010. For estates of decedents dying 2010, there is an option to elect not to apply the step up basis rules (item A), but instead use the modified carryover basis rules (item B):
A. The estate tax based on the new 35% top rate and the $5 million exemption with a stepped up basis, or
B. No estate tax and use the modified carryover basis rules which limit the step up to $1.3 million for assets transferred to a surviving spouse.
Another new twist to the estate tax is the portability between spouses of the unused exclusion. With portability, a surviving spouse could elect to use the unused portion of the estate tax exclusion of his or her predeceased spouse if the election is made on a timely filed estate tax return.
Payroll Tax Holiday
Millions of individuals will see their paychecks increase as the tax bill provides for a payroll tax holiday. This holiday reduces the employee share of the Old Age and Survivors Disability Insurance (OASDI) portion of Social Security taxes from 6.2% to 4.2% for wages earned in calendar year 2011 up to the taxable wage base of $106,800. Self-employed individuals would pay 10.4% on self-employment income up to the threshold.
* Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.
Income Tax Rates
Simple steps can help you avoid becoming a victim of identity theft and fraud.
You have more weapons against identity theft than you may think. Being aware of the threat and exercising common sense are two of the most important.
Recognize that your personal information is valuable to thieves, and make protecting it part of your normal routine at home, at work, at locations where you do business, on vacation—everywhere.
The Better Business Bureau offers an excellent self-quiz you can take to evaluate how well you are protecting yourself against identity theft. In addition, use the links below for more common-sense precautions you can take.
- Keep all personal information, including passwords and account numbers, securely hidden in your home.
- Secure your purse or wallet at work and elsewhere.
- Make sure no one is lingering nearby before you give personal information over the phone or in person, or enter it into an ATM or other device.
- Use only secure mailboxes for incoming and outgoing mail.
- Shred personal documents before discarding.
- Ask about security procedures of companies with whom you do business.
- Carry your Social Security card with you. When you go out, carry only those credit cards you need.
- Give out your Social Security number, account numbers, passwords or any other private information in response to e-mail, phone or in-person requests from sources you don’t know.
- Enter personal information on Websites you don’t know to be legitimate and secure.
Important note: Children and teenagers can be targets of identity thieves, too. In fact, they make particularly attractive victims because their non-existent credit records are completely unblemished. In addition, it may take months or even years for the theft of a young person’s identity to be discovered. So it’s essential for parents to:
- Be on the lookout for any evidence of misuse of a child’s Social Security, bank account, or credit card number or any other personal financial information.
- Teach children and teens to take basic precautions against revealing personal information.
- Make sure any computer the child is using is secure. (See Computer precautions).
For more information, see Is Your Teen’s Identity Protected?.
Account Management Precautions
- Use electronic transactions—such as online banking—instead of paper statements, bills and checks.
- Close any inactive accounts and destroy old or expired credit cards.
- Write only the last four digits of account numbers, not the whole number, on checks when paying bills.
- Check credit card statements against receipts.
- Monitor all your accounts regularly and report any suspicious activity to the account issuer.
- Review your credit report, or “credit file disclosure,” regularly. Under the Fair and Accurate Credit Transactions Act of 2003 you are entitled to obtain one free credit report per year by calling 877-322-8228 or at AnnualCreditReport.com.
- Update your computer’s virus protection, firewall, browser security features and other privacy software tools frequently to be sure you have the latest version available. Set all software to automatically update your system when new security features are released. (visit http://update.microsoft.com for all Microsoft products)
- Resist opening files or links from unknown sources. Instead, type the URL of the site you want directly into the address line.
- Be creative in choosing passwords for your online accounts and don’t use obvious ones like birthdates, initials, or addresses. Add numeric, upper-case and special characters (!@#$) for additional strength Change your passwords frequently, too.
- Use only secure banking, shopping or other business Websites that have “https” and/or a padlock icon in the URL and/or a padlock icon in the status bar at the bottom of your screen, signifying that all transactions are secured.
- Avoid storing personal information on a laptop computer unless absolutely necessary.
- Run a “wipe” utility before disposing of any computer. That’s the only way to completely erase all information.
What Measures Does The Hajdari Group Take to Protect My Information?
At The Hajdari Group, information security is a top priority. We recognize the trust you place in us when you disclose personal information. Ensuring the security of that information is at the core of our business.
More than 750 of our professional associates work exclusively in security management. From technological safeguards to employee policies and operating procedures, we maintain constant vigilance where your privacy is concerned.
At our international headquarters in St. Petersburg, Florida, security guards are on site 24 hours a day. The security desk is staffed during business hours for visitor check-in and employees are required to wear identification badges when on the premises. All high-traffic areas, restricted-access areas and building exteriors are under video surveillance.
Our technological systems are monitored 24 hours a day, 365 days a year, for signs of tampering or unauthorized activity. We employ the latest firewall and anti-virus technology as well as specialized programs to prevent and detect intrusion. We also maintain strict controls to limit employee access to the systems.
Our information technology professionals are constantly researching and developing enhancements to keep us at the vanguard of data security. A team of independent auditors reviews our technological systems quarterly, biannually and annually.
Our employee policies place major emphasis on preserving confidentiality. Newly hired associates receive comprehensive information about our privacy policies and procedures in the employee handbook, as well as initial training in security awareness. Then, on a regular basis, all employees must attend additional training in ethics and security. Our regulatory compliance specialists ensure that we meet the requirements of federal legislation regarding customers’ privacy.
The financial advisors affiliated with our company throughout the country also receive training at our national conferences, including a presentation by the FBI on information security.
Our professional Business Continuity team focuses on preparing for potential business disruptions due to unforeseen circumstances such as natural disasters. Their goal is to ensure continuity of critical operations and preserve data security even during emergency situations. They oversee management of our remote operations center and emergency functions such as data retention, backup procedures and off-site information storage.
The Hajdari Group executives play an active role in industry-wide organizations devoted to sharing information about physical and cyber security. Thomas A. James, Chairman and Chief Executive Officer holds leadership positions in key national associations.
How Will I Know if Someone Has Stolen My Personal Data?
Be on the lookout for signs that someone is misusing your information. The sooner you can spot the problem, the faster and less expensively you’ll be able to get your affairs back to normal.
Some of the warning signs include:
- Unusual activity on a credit card or bank account.
- Unsolicited credit cards you didn’t apply for.
- Bounced checks resulting from unauthorized withdrawals from your account.
- Unwarranted collection notices or calls from collection agencies.
- Unexpected bills for accounts you never opened.
- Missing bills or statements that you would normally receive. A false change of address may have been filed to prevent you from receiving bills that would reveal unauthorized activity on your accounts.
Another “red flag” is being denied credit when you know you qualify, or receiving less favorable credit than you deserve. Someone may have compromised your credit rating by making fraudulent transactions using your account information.
Also be alert to damage to your driving record by violations you didn’t commit. These can even result in revocation or suspension of your license.
In general, watch for any unusual circumstance that might suggest someone is using your accounts, driver’s license, or personal information.
What If I Am a Victim of Identity Theft?
The first step is knowing what action to take
Many public and private agencies are working together to fight identity theft. By notifying them that you have been a victim, you help them track down the offenders.
- Notify affected businesses, such as banks, stores where you have accounts, and other credit issuers. Tell them what has happened, and close the accounts.
- Contact the Federal Trade Commission at 877-438-4338 for complete information about filing a complaint and taking other actions.
- Contact the fraud departments of the three major credit bureaus.
- Equifax: 800-525-6285
- Experian: 888-397-3742
- TransUnion: 800-680-7289
Ask one of the bureaus to place a fraud alert on your credit report, which will help prevent new credit accounts from being opened without your express permission.
- Contact your local police and request a copy of your report.
Keep complete, accurate records of all the steps you take in reporting identity theft.
When you notify various businesses and agencies, do so both by phone and in writing. Include a date/time log of phone calls, including the names of people with whom you speak and what they tell you. Also keep copies of any correspondence, along with the names, phone numbers and addresses of anyone you contact. This will be extremely important if you have to prepare a case to recover damages.
- If your Social Security card has been stolen, contact the Social Security Administration for a replacement card.
- If the theft involves your mail, contact the Postal Inspection Service, the primary law enforcement arm of the U.S. Postal Service.
- If your driver’s license has been stolen, contact the issuing office to cancel it and obtain a replacement.
- Check the Federal Trade Commission’s Web pages devoted to resolving specific problems—such as fraudulent bank withdrawals, misused credit cards, stolen Social Security numbers, mail theft, driver’s license theft, and others—for additional details about what to do.
Where Can I Learn More About This?
You can help arm yourself against identity thieves by taking advantage of the wealth of information available. Here are just a few of the best online resources, ranging from facts and tips to specific steps in reporting identity crimes:
- The Federal Trade Commission’s identity theft website is a comprehensive online resource. You can also call the FTC at 877-438-4338 and request printed materials about identity theft.
- The Better Business Bureau offers valuable reports and articles about new ID theft tactics and measures to protect yourself and your family.
- Looks too Good to Be True.com is a site sponsored jointly by the federal government and private industry. It includes consumer alerts, new scams underway, reports of actual identity theft cases, and other useful information.
- Fight Identity Theft is a privately-developed site that includes the latest news about identity theft and fraud, preventive strategies, online discussion forums and a great deal of practical information for consumers.
- AnnualCreditReport.com is the central site where you can request your free credit file disclosure, commonly called a credit report, once every 12 months from each of the nationwide consumer credit reporting companies. You are entitled by law to these free reports.
- OnGuard Online provides practical tips from the federal government and the technology industry to help consumers guard against Internet fraud, secure their computers, and protect personal information.
- The Internet Crime Complaint Center (IC3) is specifically devoted to “cyber crime,” including identity crimes carried out via the Internet. Sponsored by the FBI and the National White Collar Crime Center, IC3 provides valuable alerts regarding the newest types of cyber crimes.