by Jean Miller | Accounting News, COVID-19, News, Tax Planning - Individual
The COVID-19 virus has spread unease and fear in 2020, and not just from a health standpoint. With millions of Americans out of work and small businesses forced to close shop due to the pandemic, financial fears have pushed front and center over the past few months. This article will address a common financial fear as of late: How to ride out this storm while keeping your credit score as stable as possible.
Check Credit Score Regularly
You should already be regularly monitoring your credit report during the best of times, but it’s especially important to do so during this tumultuous season in order to spot possible mistakes before they have a chance to negatively affect your credit score. Contact the creditor immediately if you do catch a mistake. Recent mistakes can typically be rectified with minimal headache while ones that sit on your credit report longer can take longer to get resolved. With COVID scams happening and many Americans’ income in flux, it’s good practice for the time being to check your credit reports monthly. In fact, the three national credit reporting agencies—Equifax, Experian, and Transunion—are offering free weekly credit reports until April of next year. You can access your reports at AnnualCreditReport.com.
Make On-Time Payments or Contact the Creditor
When possible, continue to make on-time payments, even if it’s just the minimum amount due, through the pandemic. A positive payment history is a major step in ensuring that your credit score stays the course. However, if your income has been affected and emergency savings accounts have been drained, this might not be possible. If this is the case, the best course of action is to contact the lender or creditor as soon as possible as they may have workable payment options available to help you get through this time. Proactive and early communication is paramount. Be prepared to discuss how much you can afford to pay and when you expect to resume regular payments.
Consider a Balance Transfer
You may have found over the past few months that you’ve needed to rely more on credit cards while simultaneously being unable to pay them off each month. If so, now might be a good time to explore a balance transfer where your debt would be transferred to a card that offers a lower interest rate on that balance and may reduce your monthly payment. The low-interest rates are typically temporary, but the payment reduction from lower-interest rate cards can at least help to keep your credit card debt from escalating out of control until you can get back on your feet.
Budget and Make a Plan / Prioritize Payments / Revisit Budget
This crisis is affecting almost everyone, whether you’ve lost your job, you’ve experienced a reduction in work hours, or you’re anxious about the economic fallout of the pandemic, so there’s no better time to rework your budget following these steps:
- Assessing any take-home income.
- Examine your financial commitments and variable spending
- Determine where you can cut back, even temporarily
Taking steps to free up more money in your budget helps to decrease financial stress, which allows you to focus on the most necessary financial commitments while better positioning yourself to protect your credit. If needed, that money can be used for essential expenses, like food and bills, but if you’re in a better position, you can sock away some of it in an emergency savings account for future use.
by Jean Miller | Accounting News, Business Consulting, IRS, News, Resources, Tax, Tax Consulting, Technology
In the midst of identity scams and credit card hacking, the IRS has warned against another scam, this time targeted at businesses and employers. There is a growing W-2 email scam threatening sensitive tax information and the IRS wants to alert payroll and human resources officials so they can be on their guard.
A simple email beginning with a casual greeting has quickly become one of the most dangerous phishing attacks. Hundreds of employers fell victim to the scheme last year, which left thousands of employees vulnerable to tax-related identity theft.
Since there have been significant improvements made in curbing stolen identity refund fraud, criminals are now seeking more advanced personal information in order to fraudulently file a return. W-2’s contain a wealth of detailed taxpayer income and withholding information, which is exactly what frauds are searching for and why they are targeting employers to acquire such information.
The scam has only grown larger in recent years, attacking a variety of businesses, from public universities and hospitals to charities and small businesses. The IRS wants to educate employees and employers, particularly payroll and HR associates who are often targeted first, to hopefully limit the number of successful attacks.
The scammer will likely spoof the email of someone high up in the organization or business, sending an email to someone with W-2 access using a subject line similar to “review” or “request.” The “request” will likely be a list of all the employees and their W-2 forms, potentially even specifying the file format. Since the employee believes they are corresponding with an executive of some sort, they may send the information without question, meaning weeks could go by before it is even evident they have been scammed. This gives frauds plenty of time to file numerous fake returns.
Because this scam poses such a major tax threat at both the local and state level, the IRS has set up a specific reporting process to alert the proper individuals, which is outlined briefly below:
- Email [email protected] to notify the IRS of a W-2 data loss and provide contact information. Type “W2 Data Loss” into the subject line so that the email can be routed properly and do not attach any employee personally identifiable information.
- Email the Federation of Tax Administrators at [email protected] to get state specific information on reporting victim information.
- Businesses or payroll service providers should file a complaint with the FBI’s Internet Crime Complaint Center (IC3.gov). They may be asked to file a report with local law enforcement as well.
- Notify employees so they are able to take protective steps against identity theft. The Federal Trade Commission website, www.identitytheft.gov, provides guidance on steps employees should take.
- Forward the scam email to [email protected].
Beyond just educating employees, payroll officials and HR associates about the scam, employers are encouraged to set up policies or practices to avoid being hacked. Suggested policies include requiring verbal communication before sending sensitive information digitally, or requiring two or more individuals to receive and review any sensitive W-2 information before it can be sent out. The IRS is fighting diligently to protect taxpayers and lower the number of tax-related scams, so employers are encouraged to be on the defense as well and safeguard their own tax paying employees.
