The IRS Dirty Dozen

Each year, the IRS releases a list of the 12 most common scams that taxpayers may encounter during tax season. Here’s a run-down of the top scams of 2014 and how you can protect yourself.

1. Identity theft

How it works: Someone gets ahold of your personal information—such as your social security number—and commits fraud in your name. They may even file a tax return in your name to get a refund.

How you can protect yourself: Keep your info private by using encrypted passwords online and shredding personal paperwork when you no longer need it. If you think your identity has been stolen, contact the IRS Identity Protection Specialized Unit at 800-908-4490.

2. Telephone scams

How it works: Callers pretend to be from the IRS in order to steal money and personal information. They often say that you owe money and may be arrested if you don’t pay.

How you … Read More

Fixed-Rate or Adjustable-Rate Mortgage: Which is Right for You?

 

New neighbors Bob and Sam moved onto a quiet block in South Minneapolis around the same time in 2004. Their homes, which sit across the street from one another, are close in value—each sold for about $200,000—and both Bob and Sam made a 10% down payment.

About ten years after moving in, Bob and Sam began chatting about their homes at a neighborhood barbecue. The subject of mortgage payments came up, and Bob was floored to learn that Sam’s were considerably less. In fact, after punching in a few numbers on his calculator, Bob realized that over the course of the last decade, he had paid almost $24,000 more than Sam on interest and principal payments.

How did Sam get so lucky? When he bought his home in 2004, he opted for an Adjustable-Rate Mortgage (ARM) instead of the standard fixed-rate mortgage. This meant that his interest rate varied over … Read More

Dipping into an IRA without Paying a Penalty

 

Typically, withdrawing from a traditional IRA before you reach 59 ½ will earn you a 10% penalty fee, and for good reason—that money is tucked away for retirement, and anything you withdraw loses its ability to make investment gains before you reach a ripe age. In some ways the IRS penalty policy on early withdrawals is meant as a slap on the wrist to steer you from temptation that may jeopardize your financial future.

But life is often unpredictable, and sometimes you need to tap your non-Roth IRA early. Luckily, there are a number of exceptions to the 10% penalty rule.

Many life emergencies allow for an exception:

* If you become permanently disabled and are unable to do substantial gainful activity, you can tap your IRA with no worries about fees.

* High medical bills can be paid with IRA withdrawals if the expenses are not reimbursed by insurance … Read More