How to Protect Your Identity After the Equifax Data Breach

In early September, we posted our “How to Avoid Identity Theft” blog. Due to the recent Equifax data breach, we are providing a follow up post with additional steps you can take to protect yourself against identity theft.

The Equifax data breach lasted from mid-May through July of this year. Hackers were able to access names, Social Security numbers, addresses, birthdates, and driver’s license numbers. To protect your identity, we recommend that you consider the following actions.

1. Keep an eye on your finances.
• You can check your credit report from each credit reporting agency once a year free of charge on www.AnnualCreditReport.com. This site is the only site that is federally authorized to provide you with your free credit reports. You can check all three reports at once, or check your report from one bureau at a time every few months. Keep an eye out for unfamiliar credit inquiries, accounts, or derogatory marks.
• You can monitor your credit score from two of the credit reporting agencies for free on www.CreditKarma.com. If you would like Credit Karma to monitor your report and notify you of changes, you can do so by following the steps below:
      o Profile & Settings > Communications & Monitoring > Check the “Credit Monitoring” box.
• Keep an eye on your bank account and credit card statements for any unfamiliar transactions. One way to monitor these accounts is to set alerts through your credit card providers and banks to notify you of transactions over a specified amount in your accounts.

2. Consider setting a fraud alert on your credit report. A fraud alert notifies lenders to take extra precautions to verify your identity if someone attempts to open an account in your name. Fraud alerts typically last for 90 days, but you have the option to place an extended fraud alert on your report that lasts for 7 years. If you would like to place a fraud alert on your report, you must contact each credit reporting agency separately. You can place the fraud alert for free online or by telephone.
• Equifax: Telephone 1-(888) 766-0008 Online www.alerts.equifax.com/AutoFraud_Online/jsp/fraudAlert.jsp
• Experian: Telephone 1-(888) 397-3742 Online www.experian.com/fraud/center.html
• Transunion: Telephone 1-(800) 680-7289 Online http://fraud.transunion.com/fa/fraudAlert/landingPage.jsp

3. Consider freezing your credit. A credit freeze prevents lenders from accessing your credit report. This makes it impossible for anyone (including you) to open new lines of credit while the freeze is in place. Credit freezes offer a higher level of protection than fraud alerts but are not a good option if you plan to apply for credit in the near future. It is important to note that your current credit and bank accounts will still be vulnerable to identity theft. In most states, the freeze remains in place until you remove it. In a few states, the freeze is removed automatically after 7 years. To put the freeze into place, there is a fee of between $5 to $10 required by each credit reporting agency (unless you are already a victim of identity theft, in which case, the fee is waived). You must also pay between $5 to $10 if you would like to lift the freeze from your report. You might consider placing a freeze on your credit if you are a victim of identity theft.  You can place the freeze online or by telephone. When you request the freeze, you will be given a PIN. Be sure to save the PIN in a secure location, as you will need it to remove the freeze from your credit.
• Equifax: Telephone 1-(800) 685-1111 Online www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp
• Experian: Telephone 1-(888) 397-3742 Online www.experian.com/ncaconline/freeze
• Transunion: Telephone 1-(888) 909-8872 Online http://freeze.transunion.com/sf/securityFreeze/landingPage.jsp

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How to Avoid Identity Theft

There are a variety of ways in which thieves can use stolen personal information to commit fraud. The most common types of identity theft are the following:

1. Account Takeover Fraud: The thief uses personal information to access your financial accounts and reroute your account communications. They may use this information to wipe out your funds or pose as you to apply for credit.

2. Card Not Present Fraud: With this method, the thief uses stolen credit card information to buy items online or over the phone. 

3. New Account Fraud: New account fraud is when a credit account is fraudulently opened in your name and all account information is sent to the thief. 

4. W2 Fraud: This type of theft occurs when the thief sends an official-looking email that says it’s from the IRS requesting W2 or payroll data. These emails are designed to get information that can be used for crimes like filing fraudulent tax returns for refunds.

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Exercise Can Also Improve Financial Health

Everyone knows that regular exercise can improve your physical well-being, but a recent study shows that staying active can also improve your financial well-being. The study, carried out by the American Heart Association, indicates that regular exercise can help keep medical costs down. Medical costs are a major expense for many, especially those in retirement. According to an analysis by HealthView Services, a 65-year old couple retiring in 2017 will need an estimated $400,000 to cover their total health care costs in retirement. To add insult to injury, these costs have been rising at a faster rate than overall inflation and are expected to continue on this trend.

Participants in the study who exercised at recommended levels ­­had significantly lower health care related costs on average than those who did not exercise. Recommended exercise is defined as at least 30 minutes of moderate aerobic activity 5 days a week (for example, speed-walking), or at least 25 minutes of vigorous aerobic activity 3 days a week (for example, running or swimming). Participants with heart disease who exercised at recommended levels saved $2,500 per year on average on medical costs while participants who were already healthy saved $500 per year on average.

If you have trouble sticking to an exercise regimen, keep in mind that exercising can improve your financial health and help you achieve your retirement goals.  

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How to Maximize College Financial Aid Eligibility

It is a common misconception that students from high-income families are not eligible for financial aid. In fact, anyone can be eligible for financial aid if the estimated cost of college is higher than their expected family contribution (EFC). The EFC calculation takes into account family income, family assets, family size, and the number of children in college. There are a variety of techniques that can be used to reduce EFC, and therefore boost eligibility for financial aid.

1. Hold assets in parent’s names. The EFC formula factors in the assets and income of the parents and the student. Students are expected to use up to 20% of their assets to pay for college, while their parents are only expected to use up to 5.6% of their assets. Therefore, to minimize EFC, assets should be held under the parent’s names.

2. Reduce assets by paying down debt or maximizing retirement contributions. Most liquid assets, aside from retirement accounts, are factored into the EFC calculation. You can reduce your includable assets by paying down debt or maximizing contributions to retirement accounts before filing the FAFSA.

3. Defer income. Up to 50% of a student’s income and 47% of parent’s incomes are expected to be used for college. One method of reducing reportable income is deferring it when possible. The FAFSA uses the tax return from two years prior to determine income, so any income reduction strategies must be implemented two years before the student starts attending college.

4. Apply early. Aid is provided on a first-come, first-served basis by some schools. Therefore, the FAFSA should be completed as early as possible. The FAFSA can be submitted from October 1st in the year prior to attendance through June 30th of the year of attendance.

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Tax Planning - What’s Different In 2017 For Taxes

For 2017, the IRS is revising more than 50 tax provisions for both individuals and business taxpayers.  Any changes or modifications made by the new administration may or may not be applicable to 2017 taxes.  So for the time being, the following IRS revisions are effective for the 2017 tax year.

Standard Deduction – will increase from $12,600 to $12,700 for married couples and from $6,300 to $6,350 for single filers.

Alternative Minimum Tax (AMT) – the exemption amount will increase from $83,800 to $84,500 for married couples and from $53,900 to $54,300 for individuals.

Senior (65+) Medical Expense Deduction – the ability to deduct medical expenses will rise to 10% of AGI, up from 7.5% of AGI.

Mileage Expense – is falling from 54 cents per mile to 53.5 cents per mile for business miles & 17 cents per mile down from 19 cents per mile for medical & moving purposes.

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