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Philip Schreiber, CPA

Schreiber Advisors, PC.

 


 

 

 

Other Articles

Click on this Link to Access These & Other Past Articles



- How You Can Help Prevent Tax-Related Identity Theft

 

- Consolidate Accounts And Simplify Your Financial Life

 

- Time to Start Year-End Tax Planning

- Shared Equity Financing Arrangements For Home Ownership
 

- Planning To Avoid Or Minimize The 3.8% Net Investment Income Tax

- Supreme Court Legalizes same-gender Marriages In All States

- The Importance of Updating Beneficiary Designations

- Now is a Good Time to Start Planning and Organizing Your Taxes

- The Many Benefits of a Health Savings Account (HSA)

- Combined Business And Vacation Travel

- What You Should Do With An Identity Verification Letter From The Irs

- Donating A Life Insurance Policy To Charity

- Taxation Of College Financial Aid

 


 

 

5 Tips to Keep Your Tax Records Secure - How You Can Help Prevent Tax-Related Identity Theft - Consolidate Accounts And Simplify Your Financial Life



5 Tips to Keep Your Tax Records Secure

If you're still keeping old tax returns and receipts stuffed in a shoe box stuck in the back of the closet, you might want to rethink that approach.

The IRS has teamed up with state revenue departments and the tax industry to make sure you understand the dangers to your personal and financial data. Taxes. Security. Together. Working in partnership with you, we can make a difference.

You should keep your tax records safe and secure, whether they are stored on paper or kept electronically. The same is true for any financial or health records you store, especially any document bearing Social Security numbers.

You should keep always keep copies of your tax returns and supporting documents for several years to support claims for tax credits and deductions.

Because of the sensitive data, the loss or theft of these documents could lead to identity theft and have an economic impact. These documents contain the Social Security numbers of you, your spouse and dependents, old W-2 income and bank account information. A burglar could easily turn your old shoe box full of documents into a tax-related identity theft crime.

Here are just a few of the easy and practical steps to better protect your tax records:

1) Always retain a copy of your completed federal and state tax returns and their supporting materials. These prior-year returns will help you prepare your next year's taxes, and receipts will document any credits or deductions you claim should question arise later.

2) If you retain paper records, you should keep them in a secure location, preferably under lock and key, such as a secure desk drawer or a safe.



3) If you retain you records electronically on your computer, you should always have an electronic back-up, in case your hard drive crashes. You should encrypt the files both on your computer and any back-up drives you use. You may have to purchase encryption software to ensure the files' security.

4) Dispose of old tax records properly. Never toss paper tax returns and supporting documents into the trash. Your federal and state tax records, as well as any financial or health records should be shredded before disposal.

5) If you are disposing of an old computer or back-up hard drive, keep in mind there is sensitive data on these. Deleting stored tax files will not remove them from your computer. You should wipe the drives of any electronic product you trash or sell, including tablets and mobile phones, to ensure you remove all personal data. Again, this may require special disk utility software.

The IRS recommends retaining copies of your tax returns and supporting documents for a minimum of three years to a maximum of seven years. Remember to keep records relating to property you own for three to seven years after the year in which you dispose of the property. Three years is a timeframe that allows you to file amended returns, or if questions arise on your tax return, and seven years is a timeframe that allows filing a claim for adjustment in a case of bad debt deduction or a loss from worthless securities.

To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. You also can read Publication 4524, Security Awareness for Taxpayers.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
 



How You Can Help Prevent Tax-Related Identity Theft

Tax-related fraud isn't a new crime, but tax preparation software, e-filing and increased availability of personal data have made tax-related identity theft increasingly easy to perpetrate. The IRS is taking steps to reduce such fraud, but taxpayers must play their part, too.

How they do it

Criminals perpetrate tax identity theft by using stolen Social Security numbers and other personal information to file tax returns in their victims' names. Naturally, the fake returns claim that the filer is owed a refund - and the bigger, the better.

To ensure they're a step ahead of taxpayers filing legitimate returns and employers submitting W-2 and 1099 forms, the thieves file early in the tax season. They usually request that refunds be made to debit cards, which are hard for the IRS to trace once they're distributed.

IRS takes action

The increasing rate of tax-related fraud not to mention the well-publicized 2015 IRS data breach has spurred government agencies and private sector businesses to act. This past June, a coalition made up of the IRS, state tax administrators, tax preparation services and payroll and tax product processors announced a new program with five initiatives:

1. Taxpayer identification. Coalition members will review transmission data such as Internet Protocol numbers.

2. Fraud identification. Members will share fraud leads and aggregated tax return information.

3. Information assessment. The Refund Fraud Information Sharing and Assessment Center will help public and private sector members share information.

4. Cybersecurity framework. Members will be required to adopt the National Institute of Standards and Technology cybersecurity framework.

5. Taxpayer awareness and communication. Members will increase efforts to inform the public about identity theft and protecting personal data.

Your role in preventing fraud

But the IRS and tax preparation professionals can't fight fraud without your help. Be sure to keep your Social Security card secure, and if businesses (including financial institutions and medical providers) request your Social Security number, ensure they need it for a legitimate purpose and have taken precautions to keep your data safe. Also regularly review your credit report. You can obtain free copies from all three credit bureaus once a year.
 


 

Consolidate Accounts And Simplify Your Financial Life

If you've accumulated many bank, investment and other financial accounts over the years, you might consider consolidating some of them.

 

Having multiple accounts requires you to spend more time tracking and reconciling financial activities and can make it harder to keep a handle on how much you have and whether your money is being invested advantageously.

Start by identifying the accounts that offer you the best combination of excellent customer service, convenience, lower fees and higher returns. Hold on to these and consider closing the rest, keeping in mind the bank account amounts you'll be consolidating.

The Federal Deposit Insurance Corporation generally insures $250,000 per depositor, per insured bank. So if consolidation means that your balance might exceed that amount, it's better to keep multiple accounts. You should also keep accounts with different beneficiaries separate.

When closing accounts, make sure you stop automatic payments or deposits and destroy checks and cards associated with them. To prevent any future disputes, obtain letters from the financial institutions stating that your accounts have been closed. Closing an account generally takes several weeks.
 

Remember you can call our offices if you have any questions about these or any other accounting, tax, financial planning or insurance related issues, at 313-388-0300 or our other area offices listed below.

 

Regards, Philip Schreiber, CPA

Schreiber Advisors, PC

 

Philip Schreiber, CPA | Schreiber Advisors, PC | Certified Public Accountants
phil@cpatechs.com
Allen Park Office: 14801 Southfield Road | Allen Park, MI 48101
313-388-0300
| Fax 313-388-0303

Farmington Hills Office: 30201 Orchard Lake Rd., Ste 115 | Farmington Hills, MI 48334 | 248-702-0681 | Fax: 248-702-0684

Troy Office: 888 W. Big Beaver Rd., Suite 888 | Troy, MI 48084 | 248-689-7550 | Fax: 248-689-4376

Grosse Pointe Park Office: 787 Berkshire | Grosse Pointe Park, MI 48230
313-824-9095

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