Identity theft is a very serious crime.  It can destroy your credit and your name.  It can also cost you time and money.  Thieves who are pros have various ways of getting your information, some of which include:

Garbage Diving: They go through your trash at a dumpsite

Skimming: They steal credit/debit card numbers by using a special storage device when processing your card

Phishing: They pretend to be financial institutions or companies and send spam or pop-up messages for you to reveal personal information

Your address: They divert your billing statements to another location by filling out a change of address form.

Stealing: They steal wallets, purses, mail, pre-approved credit offers, new checks and tax information.  They can also steal personal information from their employers or employees through bribery.

How to safeguard your information:

a) Shred financial documents and paperwork

b) Don’t carry your social security card around or write it on a check

c) Don’t give your personal information to anyone over the phone, internet or via mail unless you know who it is.

d) Never click on links sent in unsolicited mails.  They can track you on your home computer’s IP address and gain access to vital information.

e) Never use obvious passwords

f) Keep your personal records in a safe place at home or a P.O. Box

Be on the look out for suspicious activity and watch out for these activities:  

a) Bills which don’t arrive on time

b) Unexpected credit cards or account statements

c) Denials for credit for no reason whatsoever

d) Calls or letters about purchases you did not make.

Things you can do:

a) Check your credit reports.  Equifax, Experian and TransUnion is required by law to provide you with your credit report free of charge once a year if you ask for it. You can do this by visiting www.annualcreditreport.com, calling 1-877-322-8228 or writing to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

b) Review financial accounts and billing statements every month

If you suspect fraud on your account, do the following:

a) Place a “fraud alert” on your credit report.  The three major credit reporting agencies place a 90 day fraud alert on your account which tells creditors to follow certain procedures before issuing you any credit or new accounts.  They also supply you with a free copy of your report for you to check for any fraudulent activity.  The three agencies are:

Equifax: 1-800-525-6285

Experian: 1-888-397-3742

TransUnion: 1-800-680-7289

b) Close all accounts that have been tampered with immediately.  Call the security department of each of those accounts and follow up in writing.  Use the ID theft affidavit at www.ftc.gov/idtheft to support your written statement.  Ask for verification that they have closed the account and the fraudulent charges were dismissed.  Keep copies of all documents and records of your conversations about the theft.

c) File a police report just in case some creditors want proof of the crime

d) Report the theft to the Federal Trade Commission by:

Online: www.ftc.gov/idtheft

Phone: 1-877-438-4338

Mail: Identity Theft Clearinghouse, Federal Trade Commission, Washington, D.C. 20580

Some of my clients have asked about information concerning the 2009 Home Buyer Tax Credit.  Here are a few highlights of the basics however, I urge you to keep up to date on this credit by visiting the federal website at www.irs.gov for detailed information.

Tax credit is $8,000 for 2009 home buyers (you do not need to pay this back).  They cannot use the credit as part of their down payment on the purchase.

The home must be purchased for $80,000 or more. If the home purchase price is less than $80,000 the credit will only be 10% of the purchase price.

The person eligible must not have had any interest on a home in the 3 previous years.  It must also be their principal residence and live there more than 50% of the time.

If it’s a single filer, they must not earn more than $75,000 in income.  If a joint filer, they must not earn more than $150,000 as combined income.  Income includes any kind of money asset they have (like salary, interest, dividends, pension, retirement, earnings, rental income, etc).

There is a loophole. The credit phases out between $75,000 to $95,000 for single filers and $150,000 to $170,000 for joint filers. So, if a joint filer earns more than $150,000 but under $170,000 they might still be eligible in some cases. For example, if a couple earns $165,000 and the IRS income limit is $150,000 for joint filers, the excess income is $15,000.  So, the IRS will take the $15,000 and divide it by $20,000 (their statute).  That works out to $15,000 divided by $20,000 = 75%.  So, the IRS will take that 75% and multiply it by the $8,000 credit and give you a credit for $6,000 instead.

For tax time, filers will plug in the $8,000 credit on their home and it will reduce their taxable income.  So, for example if they owed $9,500 in taxes and they plug in the $8,000 tax credit for their new home, their tax liability to the IRS will only be $1,500.  If you do your tax return and let’s say you owe $6,000 in taxes and then plug in your $8,000 tax credit, the IRS will send you a check for $2,000.  So either way, you will reap the full benefits of the credit.

When filling taxes, filers need to fill out a form 5405 and attach it with their 1040.  Salaried employees can revise their Form W-4 with their employers to reduce their tax liability and increase their take home pay if they’re certain they will get the $8,000 tax credit.  Or they can all just wait until the end of the year and let the IRS refund them any money if necessary.