Common Sense for Your Dollars and Cents | SCACPA Financial Literacy Outreach Initiatives

South Carolina Association of Certified Public Accountants www.scacpa.org | 888.557.4814

Financial Literacy Resources Common Sense for Your Dollars and Cents

Did You Know?

• 70% of all Americans live paycheck to paycheck. • In 1929, only 2% of Americans had a mortgage and by 1962 only 2% did not

have a mortgage. • The typical household has more than $38,000 in debt. • 55% of American savings is a negative amount. • Personal finance is the #1 stress factor in the workplace. • 9 out of 10 of us buy things we cannot afford. • 90% of solving a problem is realizing there is one. • 80% of students have credit card debt before they even have a job. • Few people have the courage to participate in a workshop like this one

today. • The average millionaire drives a two year old car. • We tend to worry about our money and health after they are gone. • The Joneses are broke – don’t try to keep up with them! • If you are a jerk and you become wealthy, you will become the king of jerks.


Top 15 Questions About Financial Literacy 1. If you had an emergency that cost $5,000 to $10,000 do you know how you would pay

for it and if so, how?

2. Do you know if you credit card has a variable rate?

3. Do you have a budget – in writing?

4. Do you put money away for savings each month?

5. Can income tax be charged on the interest earned from a bank savings account?

6. If you had a bad loan payment with one bank will it be considered when you apply for a loan with another bank?

7. If you were going to buy a house what is the normal amount you would have to put down

to get a loan?

8. Do you know how much money you will need to retire at your desired age?

9. What is the average amount of credit card debt for Americans?

10. Do you feel like you’re in control of your money?

11. Do you have financial goals – in writing?

12. Do you have an adequate emergency fund – of at least three to six months of income?

13. Do you regularly track your spending using a method like a receipt can, ledger, envelopes, account book or computer program?

14. Do you talk with family members amount money and financial goals?

15. Have you calculated your net worth in the past year?


My SMART Financial Goals Short‐term goals:

Amount to save each month

x Target Date/Time Frame

Estimated Cost

Example: down payment for a new car

$280/month x 18 months $5,040

Medium‐term goals:



Estimated Cost

Long‐term goals:



Estimated Cost

S = Smart M = Measurable A = Adjustable R = Realistic T = Time‐oriented


Why should you plan before each paycheck?

• You earned it. • You worked hard for it. • If you don’t tell it where to go . . . • You’ll wonder where it went!

Tips for Successful Budgeting Whether you are suddenly faced with a new financial challenge, or simply trying to save money, these tips can help you achieve your goals. Begin by creating a realistic budget plan:

• Know what bills are due and when. • A checking account will provide an easy way

to pay bills and a way to help you keep track of what you spend.

• Ask the electric and gas companies if you can get on their budget plan or average payment plan.

• Know how you spend your money. Get in the habit of keeping receipts. Categorize your expenses and look for ways you can economize.

• Plan for large, periodic expenses. Make a budget calendar showing the approximate amount of these expenses and when they’re due.

• Budget for regular maintenance and unexpected repairs.

• Adhere to a regular savings plan. Many financial advisors suggest saving 5% of your take‐home pay.

• Always keep an emergency fund on hand. • Plan ahead for major purchases rather than

making impulsive decisions. Tricks to build your savings:

• Save coins from your daily change. Put the coins in a piggy bank. You won’t miss them and you’ll be surprised how quickly they add up.

• After you’ve paid the last installment on your car or other loan, regularly add the same amount you’ve been paying to your savings.

• If you get an income tax refund, deposit it in your savings.

• Save your overtime pay instead of spending it. • When you get a raise, save it. • Put gifts of money received for birthdays, the

holidays, or other special occasions in savings. • Be sure all of your money is working for you.

Deposit extra sums of cash immediately. • Adopt a short‐term “austerity” program

during which you save as much a possible. Buy nothing unless you really need it. Cut out movies, eating out, entertaining or other expenses and deposit what you save.

Housing:

• Do your own repairs. • Be conscious of utilities usage – dim or turn

off lights, conserve hot water, turn off air conditioning in the cooler months, limit long distance phone use.

• Plan meals. • Shop garage sales. • Make your own cleaning supplies. • Buy do‐it‐yourself repair books and videos for

minor home repairs. • Put together a seasonal inspection checklist

for your home and car to prevent costly repairs in the future.

• Recycle: towels, glass cups.


Food: • Pack lunch. • Cut down on eating out. • Consider generic foods and use coupons. • Save and eat leftovers. • Use less tender cuts of meat. • Limit shopping to once a week. • Plan menus, make a grocery list.

Transportation:

• Use public transportation. • Carpool. • Get rid of one car, keep the smaller, more

fuel‐efficient car.

Recreation and Entertainment: • Seek out family‐oriented, inexpensive

activities; use public parks and picnic areas. • Give up smoking and drinking. • Take vacations at home. • Eliminate cable TV.

Personal:

• Select reasonably priced cosmetics and toiletries.

• Cut your children’s hair. • Groom your own pet.

Miscellaneous:

• Have legal aid evaluate alimony payments. • Determine if the family benefits from two

incomes

Take time to consider and major expenses you may have this year

• Is your car going to need major work? • Perhaps your refrigerator won’t last until 2011. • Make a list and then calculate how much money you will need to save from each paycheck to cover

these future expenses. • Savings in advance can mean not using credit for major expenses.


Monthly Income

After‐tax salary, Social Security $

Other (e.g., child support, rental income) $

Monthly Expenses

‐‐Housing

Mortgage/rent $

Utilities (e.g., phone, gas, electric) $

Property taxes $

Maintenance and supplies $

‐‐Food

Groceries $

Dining out $

‐‐Transportation

Fuel and maintenance $

Other (e.g., tolls, parking, bus) $

‐‐Child care/education

Child care/baby‐sitters $

Education expenses $

‐‐Consumer debt

Auto payments $

Credit card payments $

Other debt payments $


‐‐Clothing

Purchases $

Alterations, laundry, dry cleaning $

‐‐Insurance premiums

Medical/dental insurance $

Auto insurance $

Homeowners insurance $

Other insurance premiums $

‐‐Miscellaneous

Entertainment, vacations, travel $

Other $


Where Does Your Money Go? Cost per Item Cost per Day Cost per Week Cost per

Month Cost per Year

Example: Soda $0.75 $5.25 (7 days)

$22.50 (30 days)

$273.75 (365 days)

Cigarettes $3 $21 Gourmet Coffee

$5 $35

Lunch (5 days/week)

$8 $56


10 Ways to Save Money at the Grocery Store Find out easy ways to save cash on your food shopping bills By Amy Brantley, posted June 1, 2009 from Associated Content Everyone's heard of the typical ways to save money at the grocery store. You know to use coupons, stick to your list and try generic products. Isn't it time for more ideas? The following tips are sure to save you even more money on your next shopping trip. 1. Sign up for store newsletters: Store newsletters are packed with information. You'll find recipes,

information about promotions, and even coupons. If your grocery store doesn't offer a newsletter, check its Web site for money saving information.

2. Promotions: Grocery stores and manufacturers often offer promotions to help customers save. Some of the ways to save money include free products, gift certificates and special coupons. Keep your eyes peeled for promotions in newspapers, on manufacturer Web sites and in stores.

3. Join online services: If you have a hard time keeping up with coupons or matching them up with sales, there are Web sites that can help. Groceryguide.com provides a free service that allows you to compare local grocery store ads with current coupons. You can even print coupons from the site.

4. Plan ahead: It pays to plan your grocery shopping trip carefully. This includes checking your pantry and the newspapers and making a menu. It's important that your menu revolves around what you have on hand and what grocery stores have on sale.

5. Fill up before shopping: One of the biggest mistakes you can make is to go to the store hungry. Going to the store on an empty stomach almost always leads to making several impulse buys. Instead of being seduced by the candy aisle, why not try shopping shortly after meal time? Your wallet will thank you.

6. Check markdowns: One of the best ways to save money is to check for markdowns. Grocery stores often reduce the price of meat, produce and bakery items a few days before they expire. Most of the time, these products have a few more days left and are perfectly fine if used or frozen by the expiration date.

7. Look for clearance items: Sometimes there are items that just don't sell very well. When this happens, grocery stores have closeouts or place the items in a clearance bin. There is nothing wrong with them other than their lack of popularity with shoppers. Grocery stores simply need to get rid of the product to make room for another.

8. Compare unit prices: Many assume that larger packages give the consumer a better price, but this isn't always true. Carry a calculator with you to check the price per unit to make sure you're getting the best deal. If you're lucky, your local grocery store will provide these prices on the shelf price tag.

9. Don't fall for "sales": It's true that grocery stores often put sale items on the end of aisles, but that doesn't mean that everything there is on sale. Also, don't be fooled by X for $X sales. The items aren't always less expensive; sometimes they are even marked up!

10. Check nongrocery stores: From your neighborhood Target and Wal‐Mart stores to warehouse stores such as Sam's Club and Costco, merchants that don't specialize in food often have great deals available on everything from milk to pre‐packaged foods.


10 Ways You Can Save Gas 1. Go the speed limit. Use cruise control. Speed limits are calculated for

maximum safety – they'll also reward you with maximum gas mileage. You can get up to 20 percent more mileage traveling 55 mph than 70 mph. Using cruise control provides additional gas savings.

2. Drive evenly. Avoid hard stops. Quick starts burn gas while hard stops also cost you. Take your foot off the accelerator and coast a bit before stopping for a traffic light or a stop sign.

3. Avoid idling and rush hour traffic. You're burning fuel while idling – up to a gallon every hour. So, avoid rush hour traffic when possible.

4. Open windows at slow speeds. Use A/C on highways. Around town, turn your air conditioning off and roll down the windows. On the highway, open windows create drag at speeds of 40 mph or more, so roll them up and use the air.

5. Remove junk from the trunk. Added weight in your vehicle affects fuel economy, so take unnecessary items out of your trunk.

6. Fill up when it's cool and before holidays. Cooler temperatures in the early morning or late evening create less vapor. Also, getting a fill‐up three days before a holiday will help you save on the per‐gallon price at the pump.

7. Don't top off gas and tighten the cap. When buying gas, stop when the pump shuts off automatically. And remember, your tank needs both fuel and fumes, so tighten the gas cap after every fill‐up.

8. Use the correct fuel grade. Use the fuel grade recommended by your vehicle manufacturer. In addition, TOP TIER Detergent Gasoline is even better for your vehicle. It is a class of gasoline with enhanced detergency, that exceed detergent requirements imposed by the EPA. It meets voluntary deposit control standards developed by four automotive companies.

9. Don't accelerate up hill. Build up speed before an incline, and then maintain it on the way up. Coast on the way down for additional fuel economy.

10. Avoid rooftop carriers. Approximately one quarter of each gallon of gas is needed to overcome wind resistance, so avoid carrying things on your roof. If necessary, use an aerodynamic carrier to help minimize drag.

©2010 Financial Finesse, Inc. All rights reserved. This document contains confidential and proprietary information of Financial Finesse, Inc. and is intended solely for use of the intended recipient. Unauthorized reproduction or distribution is strictly prohibited. The information contained in this document is not to be construed as advice. If you have questions about your financial situation, you should contact a financial professional.

GROCERIES

Shop with cash and a list – it makes you a more careful shopper.

Use coupons – you don’t have to be a fanatic to save $10-30 a week.

Set a vegetarian menu once a week – meat is more expensive.

Shop the perimeter of the store, where most of the “raw” foods are (dairy, meat, produce) –processed foods cost more.

Brown bag your lunches to work or school at least twice a week – can save $40-80 per month.

Bring your own six-pack of soda to work each week instead of buying from the vending machines – save $125 per year!

ENTERTAINMENT

Check your cable bill – cancel services & channels not used often.

Rent a video and make your own popcorn instead of going to the movies.

Shop at used bookstores – or use your local library.

Eliminate subscriptions and memberships that you no longer use or enjoy.

Have potluck dinners with friends and neighbors instead of going out to expensive restaurants so often.

(Mostly) Painless Ways to Save Money

INSURANCE

Increase your deductibles. Combine auto and homeowners with one

company for discounts. Reduce homeowners insurance limit to actual

cost of rebuilding. Shop around every two years to make sure

you’re getting a good rate. Drop or reduce coverage you may be able to

do without, such as uninsured motorist and medical expenses for others!

EMPLOYEE BENEFITS

Take advantage of flexible spending accounts (also known as cafeteria or Section 125 plans). These allow you to reduce your taxable income for day care and medical expenses (including deductibles, prescription glasses, prescriptions, orthodontia, etc.).

It’s always a good idea to maximize your 401(k) contributions. If you can’t afford that level, make sure you at least contribute enough to receive the maximum company match.

Need life insurance? Check your benefits office for group term insurance rates, which may be less than buying an individual policy.

Whether you want to save towards your goals or pay off your debts, you’ll get there faster if you can free up more income. Think you’re already doing all that you can? Try some of these strategies, and you’ll be amazed at the savings!

Remember the difference between needs and wants? You NEED to eat lunch during your workday, but going out to a restaurant is a WANT. To find the money to reach your goals (the important wants!) be on the lookout for wants masquerading as needs. There are really two methods to increase cash flow – either decrease spending or increase income. We’ve got some great ideas to do both.

©2010 Financial Finesse, Inc. All rights reserved. This document contains confidential and proprietary information of Financial Finesse, Inc. and is intended solely for use of the intended recipient. Unauthorized reproduction or distribution is strictly prohibited. The information contained in this document is not to be construed as advice. If you have questions about your financial situation, you should contact a financial professional.

CLOTHES

Buy clothes at end of season sales for best discounts.

Shop second hand stores – particularly for kids clothes.

Take clothes that don’t fit to a consignment store – get cash or shop!

MISCELLANEOUS

Take advantage of low interest on credit card offers, even if only for 6 months.

Call your credit card company and ask if they will reduce your interest rate and/or fees – tell them you are considering a transfer to a new card.

Get receipts for all charitable contributions; donated items can be valued higher than their “yard sale” value.

Quit smoking (or at least cut back)! – If you stop smoking three packs a week you’ll save about $60 a month.

Give up that “designer” coffee and bring your own from home – save over ten bucks a week!

Declare a Frugal Week once a month – no eating out, no unnecessary purchases.

Shop yard sales for household items, bikes, sporting goods.

OR INCREASE YOUR MONTHLY INCOME

Take on a second job. Rent out a spare room to a college student. Turn a hobby into a source of income – sell

your crafts. Volunteer for overtime. Take classes that qualify you for a promotion. Teach adult education classes. Turn a special skill into freelance income

(computer, carpentry or gardening are good candidates for this type of work).

If you expect to get a tax refund, increase the number of allowances on your W-4 to increase your take home pay now.

Change your asset allocation to more income-producing investments.

FOODSTUFFSFresh vegetables Asparagus Broccoli Carrots Cauliflower Celery Corn Cucumbers Lettuce / Greens Mushrooms Onions Peppers Potatoes Spinach Squash Zucchini Tomatoes* ________________ ________________ Fresh fruits Apples Avocados Bananas Berries Cherries Grapefruit Grapes Kiwis Lemons / Limes Melon Nectarines Oranges Peaches Pears Plums ________________ ________________ Refrigerated items Bagels English muffins Chip dip Eggs / Fake eggs Fruit juice Ready-bake breads Tofu Tortillas ________________ ________________

Frozen Breakfasts Burritos Fish sticks Fries / Tater tots Ice cream Juice concentrate Pizzas Popsicles Sorbet TV dinners Vegetables Veggie burgers ________________ ________________

Condiments / Sauces BBQ sauce Gravy Honey Hot sauce Jam / Jelly / Preserves Ketchup / Mustard Mayonnaise Pasta sauce Relish Salad dressing Salsa Soy sauce Steak sauce Syrup Worcestershire sauce ________________ ________________

Various groceries Bouillon cubes Cereal Coffee / Filters Instant potatoes Lemon / Lime juice Mac & cheese Olive oil Packaged meals Pancake / Waffle mix Pasta Peanut butter Pickles Rice Tea Vegetable oil Vinegar ________________ ________________

Canned foods Applesauce Baked beans Broth Fruit Olives Tinned meats Tuna / Chicken Soup / Chili Tomatoes Veggies ________________ ________________

Spices & herbs Basil Black pepper Cilantro Cinnamon Garlic Ginger Mint Oregano Paprika Parsley Red pepper Salt Vanilla extract ________________ ________________

Dairy Butter / Margarine Half & half Heavy cream Milk Sour cream Whipped cream Yogurt ________________ ________________

Cheese Bleu cheese Cheddar Cottage cheese Cream cheese Feta Goat cheese Mozzarella Parmesan Provolone Ricotta Sandwich slices Swiss ________________ ________________

Meat Bacon / Sausage Beef Chicken Ground beef / Turkey Ham / Pork Hot dogs Lunchmeat Turkey ________________ ________________

Seafood Catfish Crab Lobster Mussels Oysters Salmon Shrimp Tilapia Tuna ________________ ________________

Beverages Beer Club soda / Tonic Champagne Gin Juice Mixers Red wine / White wine Rum Saké Soda pop Sports drink Whiskey Vodka ________________ ________________

Baked goods Bagels / Croissants Buns / Rolls Cake / Cookies Donuts / Pastries Fresh bread Pie! Pie! Pie! Pita bread Sliced bread ________________ ________________

Baking Baking powder / Soda Bread crumbs Cake / Brownie mix Cake icing / Decorations Chocolate chips / Cocoa Flour Shortening Sugar Sugar substitute Yeast ________________ ________________

Snacks Candy / Gum Cookies Crackers Dried fruit Granola bars / Mix Nuts / Seeds Oatmeal Popcorn Potato / Corn chips Pretzels ________________ ________________

Themed meals Burger night Chili night Pizza night Spaghetti night Taco night Take-out deli food ________________ ________________

Baby stuff Baby food Diapers Formula Lotion Baby wash Wipes ________________ ________________

Pets Cat food / Treats Cat litter Dog food / Treats Flea treatment Pet shampoo ________________ ________________

HOUSEHOLD Personal care Antiperspirant / Deodorant Bath soap / Hand soap Condoms / Protection Cosmetics Cotton swabs / Balls Facial cleanser Facial tissue Feminine products Floss Hair gel / Spray Lip balm Moisturizing lotion Mouthwash Razors / Shaving cream Shampoo / Conditioner Sunblock Toilet paper Toothpaste Vitamins / Supplements ________________ ________________

Medicine Allergy Antibiotic Antidiarrheal Aspirin Antacid Band-aids / Medical Cold / Flu / Sinus Pain reliever Prescription pick-up ________________ ________________

Kitchen Aluminum foil Napkins Non-stick spray Paper towels Plastic wrap Sandwich / Freezer bags Wax paper ________________ ________________

Cleaning products Air freshener Bathroom cleaner Bleach / Detergent Dish / Dishwasher soap Garbage bags Glass cleaner Mop head / Vacuum bags Sponges / Scrubbers ________________ ________________

Office supplies CDRs / DVDRs Notepad / Envelopes Glue / Tape Printer paper Pens / Pencils Postage stamps ________________ ________________

Carcinogens Arsenic Asbestos Cigarettes Radionuclides Vinyl chloride

Other stuff Automotive Batteries Charcoal / Propane Flowers / Greeting card Insect repellent Light bulbs Newspaper / Magazine Random impulse buy ________________ ________________

Other______________________________________________________________________________________________________

IMPORTANT: Please leave this list in the cart when you’re done :-) When you go...• Take canvas bags!• Plastic bags to recycle?• Clip coupons!• Propane refill for grill?• Need to return anything?

Before you check out...• Need ice?• Rent a movie?• Stock up on sale items?• Use customer reward card?• Hand over your coupons!

If found, please mail to Grocerylists.org, P.O. Box 752, St. Louis, MO 63188 USA

THE ULTIMATEST GROCERY LIST: THE DELUXE VERSION (v2.5) ©2007-2009 BILL KEAGGY & GROCERYLISTS.ORG*Yes, I know tomatoes technically are classified as fruits, not vegetables. Also, this list is comprehensive but not complete. I squeezed everything I could into one page. Friendly suggestions for improvements are welcome.

Grocerylists.org is the world’s largest online collection of found grocery lists. Visit our blog, our hilarious Top 10 lists, learn about our book of shopping lists or just waste time browsing the thousands of discarded lists in the collection: www.grocerylists.org.

The Ultimatest Grocery List! {Compliments of www.grocerylists.org}


Credit: Know the Enemy

• Discover has 50 million credit card accounts (50,000,000)! • Citibank Visa has 49 million • American Express has 48 million • Sears has 63 million • In 2003 credit card companies mailed 4 billion (4,000,000,000) offers to

93 million houses – 43 credit offers per household. • Capital One spends $70 million every three months on credit card offers. • Citibank spends more than $100 million each year marketing to students!

Tips For Maintaining Good Credit: 8 golden rules to remember Here are some of the best practices you can follow to maintain and strengthen your credit rating:

Pay Bills on Time: The payment experience that creditors and suppliers have with you impacts your personal and business credit reports. This, in turn, impacts your ability to obtain credit in the future.

Pay Careful Attention to Cash Flow: Don’t spend business profits until they are actually realized. Budget your credit card and other credit payments so you don’t take on more credit than you can afford.

Keep Business and Personal Expenses Separate: Either use a credit card just for business or make sure that your records are clear and receipts have sufficient explanations.

Be Choosy: Read the small print on credit offers, and shop for the best terms. A small difference in Annual Percentage Rate (APR) can make a huge difference when you’re running a company. Review all of the perks, fees and interest rate options before signing up for credit.

Know Exactly How Much You Buy with Credit: Keep a detailed record of your spending on credit cards just like you do with checks. Save copies of receipts and compare charges when monthly statements arrive. If you see mistakes, call your credit card issuer right away.

Bill Clients and Customers Promptly: Being punctual will help keep your cash flow moving. Don’t Overextend Your Credit: The fewer accounts you take on—whether loans or credit cards—the better it will be for your credit rating and your business health.

Check Your Credit Reports at Least Once a Year: Look at both personal and business reports to make sure they’re accurate. Serious errors that may make it impossible to get credit in the future may appear at any time. The sooner you find an error, the faster you’ll be able to correct it.


Credit Reports What type of information is on your credit report?

• Where you work • Where you live • How you pay your bills • How much you owe different companies • Your monthly payment amounts • Whether you have been sued • Whether you have filed for bankruptcy

Why do companies run credit reports on you?

• To decide the risk associated with giving you a loan • The higher the risk, the higher interest rate you pay

What are your rights?

• You must be told if your credit report is used to deny your application for credit, insurance or employment • You have the right to know what information is on your credit report • You have the right to ask for a credit score but you may have to pay for it. Your credit score is the number assigned to

your credit worthiness. • You have the right to dispute information in your credit report. • You have the right to have the incorrect information corrected. • Once the information is corrected, you have the right to a free copy of the corrected report. You also have the right to

request that they send a corrected copy to anyone who has received your report within the past six months. • Negative information over seven years old should not be reported against you. This is ten years if you have filed for

bankruptcy. • Your credit report is limited to those with a valid need for the information, such as employers, creditors, landlords or

insurers. • You have the right to limit the credit offers you receive by calling 1‐888‐5‐OPTOUT. • If you are a victim of identity theft you have additional rights that make it harder for people to get credit in your

name.

What are some negative items that can show up on my credit report?

• Bankruptcy – reported for ten years • Criminal convictions – reported without a time limit • Unpaid student loans – reported for seven years • Lawsuits or judgments’ against you – seven years or until status of limitations expires

How can I improve my credit report?

• Control spending • Prepare realistic budgets • Consolidate your debts and stop using credit • Contact your creditor and ask if you can work out a payment plan before your account is turned over to a collector.


Sample Letter to Credit Report Company Date Your Name Your Address Credit Report Company Name Address To Whom It May Concern: I am writing to dispute the following information in my file. The items I dispute are circled on the attached copy of my credit report. The item is incorrect because . I am requesting that this item be corrected. Enclosed are copies of which document why this information is incorrect. Please investigate this item and correct or delete it as soon as possible. Sincerely, Your name List of documents enclosed:

You have the right to get a free copy of your credit file disclosure, commonly called a credit report, once every 12 months, from each ofthe nationwide consumer credit reporting companies - Equifax, Experian and TransUnion.For instant access to your free credit report, visit www.annualcreditreport.com.

For more information on obtaining your free credit report, visit www.annualcreditreport.com or call 877-322-8228.Use this form if you prefer to write to request your credit report from any, or all, of the nationwide consumer credit reporting companies. The

following information is required to process your request. Omission of any information may delay your request.

If additional information is needed to process your request, the consumer creditreporting company will contact you by mail.

Your request will be processed within 15 days of receipt and then mailed to you.

Annual Credit Report Request Form

Once complete, fold (do not staple or tape), place into a #10 envelope, affix required postage and mail to:Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348-5281.

Copyright 2004, Central Source LLC

Equifax

ExperianTransUnion

I want a credit report from (shadeeach that you would like toreceive):

Shade here if, for securityreasons, you want your creditreport to include no more thanthe last four digits of yourSocial Security Number.

Shade Circle Like This >

Not Like This >

Social Security Number:

- -Date of Birth:

/ /Month Day Year

First Name M.I.

Last Name JR, SR, III, etc.

Current Mailing Address:

House Number Street Name

City State ZipCode

ZipCodeStateCity

Apartment Number / Private Mailbox For Puerto Rico Only: Print Urbanization Name

Street NameHouse Number

Previous Mailing Address (complete only if at current mailing address for less than two years):

Fold HereFold Here

Fold HereFold Here

Please use a Black or Blue Pen and write your responses in PRINTED CAPITAL LETTERS without touching the sides of the boxes like the examples listed below:

For Puerto Rico Only: Print Urbanization NameApartment Number / Private Mailbox

31238


The Snowball

Company Owed

Total Amount Due

Minimum Payment

Extra Paid on Lowest Debt

Date Paid Off!


Taxes IRS Volunteer Income Tax Assistance Program (VITA) • Free income tax preparation and free electronic filing. • For persons making $49,000 or less a year who are unable to complete their own return. • Only basic returns are prepared. • No appointment needed. First come, first serve

http://www.irs.gov/individuals/article/0,,id=219171,00.html

A Volunteer Income Tax Assistance site listing is now available on IRS.gov. This list helps taxpayers locate nearby volunteer sites that help low‐ to moderate‐income (generally, $49,000 and below) people who cannot prepare their own tax returns. IRS‐certified volunteers sponsored by various organizations receive training to help prepare basic tax returns in communities across the country. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations. Most locations also offer free electronic filing.

This site list does not include every VITA site. If you do not see one close to your immediate area, you may call the VITA site locator number at 1‐800‐906‐9887.

Items you need to bring to the VITA sites to have your tax returns prepared:

• Proof of identification • Social Security Cards for you, your spouse and dependents and/or a Social Security

Number verification letter issued by the Social Security Administration • Birth dates for you, your spouse and dependents on the tax return • Current year’s tax package if you received one • Wage and earning statement(s) Form W‐2, W‐2G, 1099‐R, from all employers • Interest and dividend statements from banks (Forms 1099) • A copy of last year’s federal and state returns, if available • Bank routing numbers and account numbers for Direct Deposit • Total paid for daycare provider and the daycare provider's tax identifying number (the

provider's Social Security Number or the provider's business Employer Identification Number)

• To file taxes electronically on a married‐filing‐joint tax return, both spouses must be present to sign the required forms.

Pub 4134 (Rev. 5-2004) 1

Low Income Taxpayer Clinic List

If you are a low income taxpayer who cannot afford professional tax assistance during audits of your federal income tax return, you may qualify for help from Low Income Taxpayer Clinics or other organizations that provide free assistance in tax disputes. Low Income Taxpayer Clinics (LITCs) represent low income taxpayers before the Internal Revenue Service in audit, appeals, and collection issues, for free or for a nominal charge. Low Income Taxpayer Clinics receive partial funding from the IRS. However, the clinics and their volunteers are completely independent of and are not associated with the federal government. These clinics are operated by nonprofit organizations or academic institutions. These Federally-funded clinics are listed below. Each clinic independently decides if you meet its income guidelines1 and other criteria before it agrees to represent you. Low income taxpayers also may be able to receive assistance from attorney referral systems operated by state bar associations, local societies of accountants, and other nonprofit tax professional organizations. This notice is not, and should not be understood to be, a recommendation by the IRS that you retain a Low Income Taxpayer Clinic or other similar organization to represent you before the IRS. 1 The Department of Health and Human Services (HHS) publishes poverty guidelines. IRS Publication 3319, Grant Application Package and Guidelines lists income ceilings for low income representation and contains a table for a family unit from 1 to 5.

Size of Family Unit Income Ceiling (250% of Poverty Guidelines)

1 $23,275 2 $31,225 3 $39,175

4 $47,125 5 $55,075

Low Income Taxpayer Clinics (LITCs) State City Name Languages Served Telephone

Numbers Alabama Birmingham Lawson State College English/Spanish (205) 925-1039 Alaska Anchorage Alaska Business Development Center, Inc. Various (800) 478-3474 Arizona Phoenix Community Legal Services, Inc. Spanish (800) 852-9075 Arizona Window Rock DNA-People’s Legal Service, Inc. Navajo/Hopi (928) 871-4151 Arkansas Little Rock University of Arkansas at Little Rock English (501) 324-9441 California Fresno Central California Legal Services, Inc. English/Spanish/Hmong (559) 441-1611 California Los Angeles HIV & AIDS Legal Services Alliance (HALSA) English/Spanish (213) 201-1640 California Los Angeles Community Based Education and Development Russian/Armenian/Ukrainian/Farsi (323) 937-7772 California Los Angeles Filipino American Service Group, Inc. Tagalog/Llokano/Bisaya (213) 487-9804 California Los Angeles Korean Resource Center Korean (323) 937-3718 California Orange Chapman University School of Law English/Spanish/Vietnamese (714) 628-2535 California Redwood City Association of Cultural Advancement for Vietnamese Vietnamese (408) 293-6906 California San Diego University of San Diego School of Law English/Spanish (619) 260-7470 California San Francisco Nihonmachi Legal Outreach Korean/Japanese/Vietnamese/Cantonese/Mandarin/

Taiwanese/Tagalog/Illocano (415) 567-6255

California San Francisco San Francisco Bar Association Volunteer Legal Services English (415) 575-3130 California Santa Ana Legal Aid Society of Orange County English/Farsi/Spanish/Vietnamese (800) 834-5001 Colorado Denver University of Denver College of Law English (303) 871-6140 Connecticut Hamden Quinnipiac College School of Law English/Spanish (203) 582-3238 Connecticut Hartford University of Connecticut School of Law English/Spanish (860) 570-5165 District of Columbia Washington American University English/Spanish (202) 274-4144 District of Columbia Washington Central American Resource Center English/Spanish (202) 328-9799 Delaware Wilmington Delaware Community Reinvestment Action Council English/Spanish (877) 825-0750 Delaware Wilmington Legal Services Corporation of Delaware, Inc. English/Spanish (302) 575-0408 Florida Daytona Beach Central Florida Legal Services, Inc. English/Spanish (386) 255-6573 Florida Florida City Coalition of Florida Farmworker Organizations, Inc. Creole/English/Spanish (305) 247-4779 Florida Miami Legal Services of Greater Miami, Inc. Creole/Haitian/Spanish (305) 576-0080 Florida Pensacola Northwest Florida Legal Services, Inc. English/Spanish/Vietnamese (850) 432-3999 Florida Tallahassee Legal Services of North Florida English/Spanish (850) 385-9007 Florida Tampa Bay Area Legal Services, Inc. English/Spanish (813) 752-1335 Georgia Atlanta Georgia State Foundation English/Spanish (404) 651-1412 Georgia Atlanta Women’s Economic Development Agency, Inc Spanish (404) 853-7680 Georgia Carrollton State University of West Georgia English (770) 836-6445 Georgia Hinesville JC Visions and Associates, Inc. English/Spanish (912) 877-4243 Hawaii Honolulu Hawaii Pro Bono Lawyer Project Legal Services of Hawaii Chuukese/English/Filipino/Hawaiian/Italian/Japanese/

Korea/Marshallese/Samoan and Vietnamese (808) 528-7050

Hawaii Honolulu Legal Aid Society of Hawaii English/Japanese/Filipino (808) 536-4302 Idaho Moscow University of Idaho English/Spanish (877) 200-4455 Illinois Chicago Center for Economic Progress English/Spanish (312) 252-0280 Illinois Chicago City Wide Tax Assistance Program English/Spanish (312) 466-0771 Illinois Chicago Korean American Resource & Cultural Center Korean (773) 506-9158 Illinois Chicago Illinois Institute of Technology English/Spanish (312) 906-5070 Illinois Chicago Loyola University Chicago School of Law English (312) 915-7176 Indiana Columbus Su Casa Columbus English/Spanish (812) 375-9370 Indiana Indianapolis Neighborhood Christian Legal Clinic Spanish (317) 415-5337 Indiana Valparaiso The Lutheran University Association d.b.a. Valparaiso University Chinese/Korean/Mandarin/Polish/Russian/Spanish (888) 729-1064 Iowa Des Moines Legal Services Corporation of Iowa/Iowa Legal Aid Spanish (800) 332-0419 Kansas Emporia Emporia State University English/Spanish (620) 341-5393 Kansas Kansas City El Centro, Inc. Spanish (913) 281-1186 Kansas Lawrence The University of Kansas Center for Research, Inc. Arabic/Chinese/Hindi/Japanese/Korean (785) 864-5665 Kentucky Highland

Heights Northern Kentucky University Spanish (859) 572-6124

Kentucky Louisville Legal Aid Society, Inc. (Volunteer Lawyer Program) Spanish (502) 584-1254 Louisiana Baton Rouge Southern University Law Clinic English (225) 771-3333 Louisiana New Orleans Southeast Louisiana Legal Service Corporation English/Spanish/Vietnamese (504) 529-1000 Maine Portland Pine Tree Legal Assistance English/Spanish (207) 942-8241

Pub 4134 (Rev. 5-2004) 2

Low Income Taxpayer Clinics (LITCs) State City Name Languages Served Telephone

Numbers Maryland Baltimore Maryland Volunteer Lawyers Service English (800) 510-0050 Massachusetts Boston Greater Boston Legal Services Chinese/Creo/Haitian/Spanish (617) 371-1234 Massachusetts Waltham Bentley College Arabic/English/Creole/Haitian/Italian/Portuguese/Russian

and Spanish (781) 891-2170

Michigan Detroit Volunteer Accounting Service Team of Michigan Arabic/Spanish (313) 647-9620 Michigan East Lansing Michigan State University-Detroit College of Law Arabic/Bahasa/Chinese/French/German/Greek/Hindi/

Indonesian/MalayPolish/Spanish/Urdu (517) 336-8084

Michigan Flint Legal Services of Eastern Michigan Spanish/German (810) 234-2621 Minnesota Minneapolis Mid-Minnesota Legal Assistance Spanish/Somali/Russian/Arabic/Hmong/Oromo/Amharic (800) 292-4150 Minnesota Minneapolis Regents of the University of Minnesota English/Somoli/Hmong/Hispanic/Vietnamese (612) 625-5515 Mississippi Greenville North Mississippi Rural Legal Services English (662) 335-8203 Missouri Kansas City Budget and Financial Management Assistance Spanish (816) 221-2034 Missouri Kansas City University of Missouri Kansas City /KC Tax Clinic English (816) 235-6201 Missouri Springfield Southwest Missouri State University Chinese/Korean/Spanish/Thai/Vietnamese (417) 836-3007 Montana Missoula Montana Legal Services Association English (406) 543-8343 Nebraska Omaha Nebraska Legal Services English/Spanish (877) 250-2016 Nevada Las Vegas Nevada Legal Services, Inc. Spanish (866) 432-0404 New Hampshire Concord Legal Advice and Referral Center English/Spanish (603) 224-3333 New Hampshire Concord New Hampshire Pro Bono Referral System English (603) 228-6028 New Jersey Bridgetown South Jersey Legal Services Spanish (800) 510-2492 New Jersey Hightstown Accountants for the Public Interest NJ English/Spanish (609) 918-0527 New Jersey Newark Rutgers, The State University of New Jersey English/Spanish (973) 353-1685 New Mexico Albuquerque New Mexico Voices for Children Spanish/Navajo/Pueblo Dialects (505) 244-9505 New York Albany Albany Law School English (518) 445-2328 New York Bronx Legal Services for New York City LSNY-Bronx English/Spanish (718) 928-3700 New York Brooklyn Bedford Stuyvesant Community Legal Services Corp. Spanish (718) 636-1155 New York Brooklyn South Brooklyn Legal Services, Inc Russian/Spanish (718) 237-5500 New York Buffalo Erie County Bar Association Volunteer Lawyers Project English (716) 847-0662 New York Elmsford Westchester Community Opportunity Program, Inc. English/Spanish (914) 592-5600

ext. 150 New York Flushing Young Korean American Service & Education Center Korean (718) 460-5600 New York Ithaca Ithaca College Chinese/Russian/Spanish (607) 274-3949 New York Jamaica Queens Legal Services Corporation Chinese/Creole/Hindi/Korean/Russian/Spanish/Urdu (718) 657-8611 New York Long Beach Circulo De La Hispanidad, Inc. Spanish (516) 889-3869 New York Long Beach Project Challenge of Long Island NY, Inc. English/Spanish (516) 897-0599 New York New York Fordham University School of Law English (212) 636-7353 New York New York The Legal Aid Society Spanish (212) 426-3013 New York Rochester Rural Opportunities, Inc. Spanish (800) 888-6770 New York Rochester Volunteer Legal Services Project of Monroe County English/Spanish (585) 232-3051 New York Syracuse Syracuse University College of Law English (315) 443-4582 North Carolina Charlotte Legal Services of Southern Piedmont, Inc. English/Spanish (704) 376-1600 North Carolina Greenville Legal Aid of North Carolina, Inc English/Spanish (800) 682-4592 North Dakota New Town Legal Services of North Dakota Arikara/English/Hidatsa/Mandan (877) 639-8695 Ohio Akron Community Legal Aid Services English (866) 584-2350 Ohio Cleveland Friendship Foundation of American Vietnamese, Inc. Cambodian/Lao/Spanish/Vietnamese (216) 651-6748 Ohio Cleveland The Legal Aid Society of Cleveland English (216) 687-1900 Ohio Columbus The Legal Aid Society of Columbus English/Spanish (866) 529-6446 Ohio Columbus Ohio State Legal Services Association English/Spanish (740) 594-3558 Ohio Painesville Lake Erie College English (440) 375-7121 Ohio Toledo Advocates for Basic Legal Equity, Inc. English/Spanish (888) 534-0814 Oklahoma Oklahoma City Oklahoma Indian Legal Services Inc. Shawnee (800) 658-1497 Oklahoma Tahlequah Northeastern State University English (918) 456-5511

ext 2968 Oklahoma Tulsa Community Action Project of Tulsa County English/Russian/Spanish/Ukrainian/Vietnamese (918) 382-3200 Oregon Hillsboro Legal Aid Services of Oregon Spanish (503) 648-7163 Oregon Portland Northwestern School of Law English (503) 768-6500 Pennsylvania Philadelphia Philadelphia Legal Assistance Center English/Spanish (888) 541-1544 Pennsylvania Pittsburgh Duquesne University School of Law English (412) 396-5877 Pennsylvania Pittsburgh The University of Pittsburgh School of Law English (412) 648-1300 Pennsylvania Villanova Villanova University School of Law English/Spanish (888) 829-2546 Puerto Rico Arecibo Oficina para la Promocion y el Desarrollo Humano Spanish (787) 817-6951 Rhode Island Johnston Rhode Island Tax Clinic, Inc. English/Spanish (401) 421-1040 Rhode Island Providence Rhode Island Legal Services, Inc. Spanish/Portuguese (401) 274-2652 South Carolina Greenville The South Carolina Center for Equal Justice All Languages (888) 346-5592 South Dakota Rapid City Technology for the Rural Enhancement of Communities English (605) 390-4391 Tennessee Oak Ridge Legal Aid Society of Middle Tennessee and the Cumberlands English/Spanish (865) 483-8454 Texas Arlington The Legal Aid of Northwest Texas Spanish (817) 649-4740 Texas Corpus Christi Latino Education Project, Inc. Spanish ((361) 980-0361 Texas Houston Centro Familiar Cristiano, Inc. English/Spanish (281) 340-2400 Texas Houston Houston Volunteer Lawyers Program, Inc. Bosnia/Hungarian/ Spanish (713) 228-0735 Texas Lubbock Texas Tech University School of Law English (800) 420-8037 Texas Weslaco Texas Rural Legal Aid, Inc. English/Spanish (800) 369-9270 Utah Salt Lake City Salt Lake Community College English/Spanish (801) 957-5576 Vermont Barre Central Vermont Community Action Council Bosnian/Congolese/Vietnamese (802) 479-1053 Vermont Burlington Vermont Legal Aid, Inc English (800) 747-5022 Virginia Charlottesville Legal Aid Justice Center English/Spanish (434) 977-0553 Virginia Falls Church Boat People S.O.S, Inc. English/Vietnamese (703) 538-2190 Virginia Richmond Community Tax Law Project English/Spanish (800) 295-0110 Virginia Falls Church Legal Services of Northern Virginia English/Spanish/Vietnamese (703) 534-4343 Washington Seattle University of Washington School of Law English/Spanish/Russian/ Somali (206) 543-3434 Washington Spokane Gonzaga University School of Law English/Spanish/Russian (509) 323-5791 West Virginia Morgantown Clinical Law Program, West Virginia University English (304) 293-7249 West Virginia Wheeling Wheeling Jesuit University English/Spanish (866) 525-9416 Wisconsin Milwaukee Legal Aid Society of Milwaukee, Inc. English/Spanish (414) 727-5300 Wisconsin Milwaukee University of Wisconsin of Milwaukee English/Spanish (414) 229-3232

The only certainties in life are death and taxes, only one of them has to be painful.

Inside this Edition:

The IRS, Taxes, and You

Don’t use RALsPage 2

VITA ProgramPage 2

Avoiding Tax ScamsPage 3

Email Tax ScamsPage 4

Choosing a tax preparerPage 5

Refund anticipation loans, free tax help, tax scams, thereare plenty of things to watch out for this tax season

It’s tax timeagain, but beforeyou start riflingthrough W-2forms andwonderingwhere youstashed thosereceipts, makesure you’recurrent with taxinformation.

And thatdoesn’t mean just

understanding the newest changes in thetax code.

Inside this newsletter you’ll find usefulinformation on everything from refundanticipation loans to tax scams to how tochoose a tax preparer.

Mostly, however, we want you to besmart about your taxes.

While the best part of tax season is, ofcourse, the refund, trying to speed up theprocess through a refund anticipation loan(RALs) is a bad idea. Refund AnticipationLoans, often referred to as “Fast CashRefunds, “Express Money,” or “InstantRefunds,” are short-term loans that for afee give you an advance on your expectedtax refund.

When your tax refund does come, youmust repay your loan with the refund. Ifyou do not receive as much as you wereexpecting, you still owe the difference onyour loan and any added interest.

Why hurry for a lot of worry? If youwait and e-file with the IRS you willreceive your tax refund just seven to 10days later, sometimes even sooner, than ifyou pay to borrow your own money with arefund anticipation loan.

If you need your money that quickly, besure to check into the volunteer income tax

assistance (VITA) program whichprovides individuals and families free taxpreparation, even e-filing their claims forthem to expedite the process.

VITA operatives are also encouraged toseek an earned income tax credit for filerswho meet the qualifications. This couldmean a lot more money for you!

Unfortunately, there are also a wholebunch of new tax scams circulating in2008 and a few old ones that simply willnot go away.

Many of these new scams involveunsolicited e-mails that try to gainpersonal information from you that canbe used to empty bank accounts, set upcredit cards, and generally wreakfinancial carnage.

The IRS stresses that they will neversend e-mails without your request or askfor you to provide them with personalinformation through e-mail. If you receivean e-mail claiming to be from the IRS andasking for personal information, it’s ascam!

Furthermore, you should never click onlinks within e-mails claiming to be fromthe IRS rather call 1.800.829.1040 toconfirm the validity of the e-mail.

Ultimately, it’s important to stay on topof your taxes because you are responsiblefor your taxes.

Even if you pay a tax preparer to doyour taxes for you, the information inyour tax file is your responsibility, sodon’t let an unscrupulous tax preparerlead you down the wrong path.

Remember, you will be the one heldresponsible. The information inside thisnewsletter will expand on these topics, aswell as others, so this tax season will beas painless as possible.

Keep in mind your refund is just a fewdays away.

Digitized by South Carolina State Library

How would you like to pay asuper-high price to borrow moneythat already belongs to you?

Sounds ridiculous, right?But that’s pretty much what

happens to many folks at tax time inthe crazy world of refundanticipation loans (RALs).

You may be tempted by tax-timeadvertisements for “Fast CashRefunds,” “Express Money,” or“Instant Refunds.”

These ads will offer to get you yourrefund in just a day or two, or evenon the spot. Beware! Many of these“fast refunds” are really LOANS,refund anticipation loans that arebased on your tax refund money.

When you get a RAL, you’reborrowing against your tax refundmoney and it’s not cheap. Loan feestypically range from $30 to $90,which translates into annualpercentage rates from 60% to over700%.

If you paid those rates on all yourborrowing, you’d probably go broke!

RAL fees, combined with taxpreparation, electronic filing, andother fees can eat away abig chunk of yourrefund.

In addition to theirhigh costs, RALs can berisky. Since a RAL is aloan from a bank inpartnership with a taxpreparer, it must berepaid even if the IRSdenies or delays yourrefund or if your refundis smaller than expected.

If you don’t payback the RAL, thelender can take actionsto hurt your creditrating and may sendyour account to a debtcollector.

In addition, whenyou apply for a RAL, you are givingthe lender the right to grab your taxrefund to pay for old tax loan debtsthat the lender claims you owe.

Want more money?All this to get your tax refund just

a few days earlier than you can forfree from the IRS.Essentially you’relining someone else’spockets with YOURhard-earned money.

Worse, RALs areoften marketed topeople who needmoney the most – low-and moderate-incomeworkers who receivethe Earned IncomeTax Credit.

Ways to avoid RALsand save at tax time:

• E-File with DirectDeposit – File your taxreturn electronically(E-File) to speed upyour refund. Tell the

IRS to deposit the refund directlyinto your bank account.

Avoid using refund anticipation loans for tax returns

Refund Anticipation Loansonly get your money to youseven to 14 days faster thane-filing with your tax preparerbut can cost you hundreds ofdollars.

Page 2

Continued on Page Seven

Puzzled by the tax law or whichcredits and deductions to take? Needassistance with your tax return?

You may want to visit a volunteersite. The IRS Volunteer Income TaxAssistance (VITA) Program or theTax Counseling for the Elderly (TCE)Program offer free tax help if youqualify.

Trained community volunteers canhelp you with special credits, such asEarned Income Tax Credit (EITC),Child Tax Credit, and Credit for theElderly for which you may qualify. Inaddition to free tax returnpreparation assistance, most sites alsooffer free electronic filing (e-filing).

Individuals taking advantage of

the e-file program will receive theirrefunds in half the time compared toreturns filed on paper – even faster ifyou have your refund depositeddirectly into your bank account.

Volunteer Income Tax AssistanceProgram (VITA)

The VITA Program offers free taxhelp to low- and moderate-income(generally, $40,000 and below) peoplewho cannot prepare their tax returns.

Certified volunteers sponsored byvarious organizations receive trainingto help prepare basic tax returns incommunities across the country.

VITA sites are usually located atcommunity and neighborhood

centers, libraries, schools, shoppingmalls, and other convenient locations.Most locations also offer freeelectronic filing.

To locate the nearest VITA site,call 1.800.829.1040.

Free Tax Counseling for theElderly (TCE)

The Tax Counseling for the Elderly(TCE) Program provides free tax helpto people age 60 and older. Trainedvolunteers from non-profitorganizations provide free taxcounseling and basic income taxreturn preparation for senior citizens.

VITA program offers free tax help for those who need it

Continued on Page SixDigitized by South Carolina State Library

Inside this Edition:

Tax time is justaround the corner andthe South CarolinaDepartment ofConsumer Affairs andthe IRS are urging youto please avoid these12 popular tax scams.The IRS warns that nomatter who preparesthe return, the taxpayeris ultimatelyresponsible for itsaccuracy.

Zero WagesIn this relatively

new scam a taxpayerattaches to his or herreturn either a Form4852 (Substitute FormW-2) or a “corrected” Form 1099 thatshows zero or little wages or otherincome. The taxpayer may include astatement indicating the taxpayer isrebutting information submitted tothe IRS by the payer.The Form 4852or 1099 is usually attached to a “ZeroReturn.”

Zero ReturnPromoters instruct taxpayers to

enter all zeros on their federal incometax filings. In a twist on this scheme,filers enter zero income, report theirwithholdings and then write “nuncpro tunc” – Latin for “now for then” –on the return.

They also do this with amendedreturns in the hope the IRS willdisregard the original return in whichthey reported wages and otherincome.

Form 843 Tax AbatementThis scam is fairly new and rests

on a faulty interpretation of theInternal Revenue Code. It involvesthe filer requesting abatement of

Don’t fall for these tax scams that get you nothingbut trouble for a return

“I’m sorry your Honor. I thought the 16thAmmendment was never ratified, wages weren’tincome, and that paying taxes was voluntary anyway.”

previously assessed tax using Form843.

Many using this scam have notpreviously filed tax returns, and thetax they are trying to have abated hasbeen assessed by the IRS through theSubstitute for Return Program.

PhishingThis is a technique used by identity

thieves to acquire personal financialdata in order to gain access to thefinancial accounts of unsuspectingconsumers, run up charges on theircredit cards or apply for new loans intheir names.

These Internet-based criminalspose as representatives of a financialinstitution and send out fictitious e-mails in an attempt to trickconsumers into disclosing privateinformation.

These scammers even pose as theIRS. Taxpayers should take note: TheIRS does not use e-mail to initiatecontact with taxpayers about issuesrelated to their accounts.

If a taxpayer has any doubt

whether a contact from the IRS isauthentic, the taxpayer should call1.800.829.1040 to confirm it.

Trust MisuseFor years, unscrupulous promoters

have urged taxpayers to transferassets into trusts.

They promise reduction of incomesubject to tax, deductions for personalexpenses and reduced estate or gifttaxes.

However, some trusts do notdeliver the promised tax benefits, andthe IRS is actively examining thesearrangements.

Frivolous ArgumentsPromoters have been known to

make the following outlandishclaims: the Sixteenth Amendmentconcerning congressional power tolay and collect income taxes wasnever ratified; wages are not income;filing a return and paying taxes aremerely voluntary; and beingrequired to file Form 1040 violatesthe Fifth Amendment right againstself-incrimination or the FourthAmendment right to privacy.

Don’t believe these or othersimilar claims.These arguments arefalse and have been thrown out ofcourt.

Return Preparer FraudDishonest tax return preparers can

cause many headaches for taxpayerswho fall victim to their schemes.

Such preparers derive financialgain by skimming a portion of theirclients’ refunds and charging inflatedfees for return preparation services.

They attract new clients bypromising large refunds. Taxpayersshould choose carefully when hiringa tax preparer.


Page 3


“Everyone should beware of thesescam artists,” said Kevin M. Brown,Acting IRSCommissioner.“Always exercisecaution when youreceive unsolicitede-mails or e-mailsfrom senders youdon’t know.”

Recipients ofquestionable e-mails claiming tocome from the IRSshould not openany attachments orclick on any linkscontained in the e-mails. Instead, they should forwardthe e-mails to [email protected].

Since the establishment of themailbox last year, the IRS hasreceived more than 17,700 e-mailsfrom taxpayers reporting more than240 separate phishing incidents. Todate, investigations have identifiedhost sites in at least 27 differentcountries as well as in the UnitedStates.

The following is the freshest batch oftax scams the IRS warns taxpayers tobe on the lookout for. The date in bold iswhen the IRS first became aware of thescam.

Jan. 14, 2008 — A new variationof the refund scheme may bedirected toward organizations thatdistribute funds to otherorganizations or individuals. In anattempt to seem legitimate, the scame-mail claims to be sent by, andcontains the name and supposedsignature of, the Director of the IRSExempt Organizations area of theIRS. The e-mail asks recipients toclick on a link to access a form for atax refund. In reality, taxpayersclaim their tax refunds through thefiling of an annual tax return, not aseparate application form.

Nov. 7, 2007 — In a variation, ane-mail scam claims to come from theIRS and the Taxpayer Advocate

Service (a genuine and independentorganization within the IRS whoseemployees assist taxpayers withunresolved taxproblems).The e-mailsays that therecipient iseligible for atax refundand directsthe recipientto click on a link that leads to a fakeIRS website. The IRS recommendsthat recipients do not click on linksin, or open any attachments to, e-mails they receive that areunsolicited or that come fromunknown sources.

Nov. 2, 2007 — A new scam e-mail that appears to be a solicitationfrom the IRS and the U.S.government for charitablecontributions to victims of the recentSouthern California wildfires hasbeen making the rounds. A link inthe e-mail, when clicked, sends the e-mail recipients to a website thatlooks like the IRS website, but isn't.They are then directed to click on alink that opens a donation form thatasks for personal and financialinformation. The scammers can use

that information to gain access to thee-mail recipients' financial accounts.The IRS does not send e-mails totaxpayers soliciting contributions toa charitable cause.

Sept. 19, 2007 — Another recente-mail scam tells taxpayers that theIRS has calculated their "fiscalactivity" and that they are eligible toreceive a tax refund of a certainamount. Taxpayers receive a page of,or are sent to, a website (titled "GetYour Tax Refund!") that copies theappearance of the genuine "Where'sMy Refund?" interactive page on thegenuine IRS website. Like the real"Where's My Refund?" page,taxpayers are asked to enter theirSSNs and filing status. However, thephony webpage asks taxpayers toenter their credit card account

numbers insteadof the exactamount of refundas shown on theirtax return, as thereal "Where's MyRefund?" pagedoes. Moreover,the IRS does not

send e-mails to taxpayers to advisethem of refunds or to requestfinancial information.

Aug. 24, 2007 — The InternalRevenue Service today warnedtaxpayers of a new phishing scam inwhich an e-mail purporting to comefrom the IRS advises taxpayers theycan receive $80 by filling out anonline customer satisfaction survey.The IRS urges taxpayers to ignorethis solicitation and not provide anyrequested information. The IRS doesnot initiate contact with taxpayersthrough e-mail.

June 19, 2007 — In another recentscam, consumers have received a"Tax Avoidance Investigation" e-mailclaiming to come from the IRS'

E-snare! IRS warns most new scams are through e-mailPage 4

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

The IRS never sendsunsolicited e-mail totaxpayers. NEVER!

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Theives these days don’t use a crowbar to steal your money; theysimply log onto the Internet. Never give out any personalinformation through e-mail.

Continued on Page SevenDigitized by South Carolina State Library

If you pay someone to prepareyour tax return, choose that preparerwisely.

Taxpayersare legallyresponsiblefor what’s ontheir taxreturns evenif prepared bysomeone else.So, it isimportant tochoosecarefullywhen hiringan individualor firm topreparepersonal returns.

Most return preparers areprofessional, honest and provideexcellent service to their clients.

Here are a few points to keep inmind when someone else preparesyour return: A paid preparer is required by

law to sign the return and fill in thepreparer areas of the form. Thepreparer should also include theirappropriate identifying number onthe return. Although the Preparersigns the return, you are responsiblefor the accuracy of every item onyour return. In addition, the preparermust give you a copy of the return. Review the completed return

to ensure all tax information, yourname, address and social securitynumber are correct. Make sure thatnone of these spaces are left blank. Review the entries and make

sure you are comfortable with theaccuracy of the return before yousign. Never sign a blank return, and

never sign in pencil. If you have provided specific

authorization in a power of attorneyfiled with the IRS, you may havecopies of notices or refund checksmailed to your preparer or

representative, but only you can signand cash your refund check. A Third Party Authorization

Check Box on Form 1040allows you to designateyour paid preparer tospeak to the IRSconcerning how yourreturn was prepared,payment and refund issuesand mathematical errors. It’s important for

taxpayers to find qualifiedtax professionals if theyneed help preparing andfiling their tax returns.

Unqualified taxpreparers may overlooklegitimate deductions or

credits that could cause clients to paymore tax than they should.Unqualified preparers may also makecostly mistakes causing their clients

Understand that the mostreputable preparers will request tosee your receipts and will ask youmultiple questions to determine yourqualifications for expenses,deductions and other items. By doingso they have your best interest inmind and are trying to help youavoid penalties, interest or additionaltaxes that could result from an IRSexamination. Choose a preparer you will be

able to contact and one who will beresponsive to your needs. Ask who will actually prepare

the return before engaging services. Avoid firms where your work

may be delegated down to someonewith less training or some unknownworker. You should know exactlywho works with your tax matters atall times and how to contact him orher; after all, you are paying for it.

Their work, your responsibility: Choose a tax preparer wisely

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Remember you are ultimatelyresponsible for your taxes, notyour tax preparer.○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

to incur assessed deficiencies,penalties, and interest. Here are some suggestions to

consider when hiring a taxprofessional: A paid preparer must sign the

return as required by law. Avoid preparers who claim

they can obtain larger refunds thanother preparers. If your returns areprepared correctly, every preparershould derive substantially similarnumbers. Beware of a preparer who

guarantees results or who bases feeson a percentage of the amount of therefund. A practitioner may not chargea contingent fee (percentage of yourrefund) for preparing an original taxreturn.

Office of Professional Responsibility(OPR) for enrolled agents or theoversight agency in states thatlicense or register tax preparers. Determine if the preparer’s

credentials meet your needs or if yourstate mandates licensing orregistration requirements for paidpreparers.

Is he or she an Enrolled Agent,Certified Public Accountant (CPA) orTax Attorney? Only attorneys, CPAsand enrolled agents can representtaxpayers before the IRS in all mattersincluding audits, collection actionsand appeals. Check IRS.gov for

information regarding abusiveshelters and other tax schemes and

Investigatewhether the preparer hasany questionable historywith the Better BusinessBureau, the state’s boardof accountancy for CPAs,the state’s bar associationfor attorneys or the IRS


Page 5

Photo courtesy of naptaxes.com


Page 6

Volunteers who provide tax counseling are oftenretired individuals associated with non-profitorganizations that receive grants from the IRS.

As part of the IRS-sponsored TCE Program, AARPoffers the Tax-Aide counseling program at more than7,000 sites nationwide during the filing season.

Trained and certified AARP Tax-Aide volunteercounselors help people of low-to-middle income withspecial attention to those age 60 and older.

Military personnel and their families get free taxhelp!

The military also has a strong Volunteer Income TaxAssistance (VITA) Program. The ArmedForces Tax Council (AFTC) consists of the taxprogram coordinators for the Army, Air Force,Navy, Marine Corps, and Coast Guard.

The AFTC oversees the operation of themilitary tax programs worldwide and serves as the mainconduit for outreach by the IRS to military personneland their families.

Marines, airmen, soldiers, sailors, guardsmen, andtheir families worldwide receive free tax preparationassistance at offices in their installations.

These VITA sites provide free tax advice, taxpreparation, and assistance to military members andtheir families. They are trained and equipped to addressmilitary specific tax issues, such as combat zone taxbenefits and the effect of the new Earned Income TaxCredit (EITC) guidelines. The military tax programsgenerated over 287,644 electronic 2006 federal incometax returns.

Commanders support the program by detailingservice members to prepare returns and by providingspace and equipment for tax centers. The IRS supportsthese efforts by providing tax software and by trainingservice members to prepare taxes at the military sites.Most service members file their tax returns electronicallyat tax centers and, by selecting direct deposit, receivetheir refunds in as little as one week.

This combined effort ensures that service membersreceive free tax assistance from well-trained andequipped military tax preparers.

Items you need to bring to the VITA/TCE Sites tohave your tax returns prepared:

Proof ofidentification

Social securitycards for you, yourspouse anddependents and/or asocial security numberverification letterissued by the SocialSecurityAdministration.

Birth dates for you, your spouse and dependentson the tax return

Current year’s tax package if you received one Wage and earning statement(s) form W-2, W-

2G, 1099-R, from all employersInterest and dividend statements from banks

(Forms 1099)A copy of last year’s federal and state returns if

availableBank routing numbers and account numbers for

direct depositTotal paid for day care provider and the day care

provider's tax identifying number (the provider's socialsecurity number or the provider's business EmployerIdentification Number)

To file taxes electronically on a married filingjoint tax return, both spouses must be present to sign therequired forms.

It is extremely important that each person use thecorrect social security number (SSN).

The most accurate information is usually located onyour original Social Security card.

Each year hundreds of thousands of returns aredelayed in processing, or credit/deductions aredisallowed because names and social security numbersdo not match social security administration records.

To prevent processing delays in paper returns andrejected electronically filed returns, volunteers check theaccuracy of each social security number, as well as thespelling of the name associated with the number.

CONTINUED from Page 2: VITA program offers free tax help for those who need it


Page 7

Credit Counseling AgenciesTaxpayers should be careful with

credit counseling organizations thatclaim they can fix credit ratings, pushdebt payment plans, or impose highset-up fees or monthly servicecharges that may add to existing debt.

If a taxpayer plans to hire a creditcounseling agency, they shouldcontact SCDCA to make sure thebusiness is licensed.

Abuse of CharitableOrganizations and Deductions

The IRS has observed increased useof tax-exempt organizations toimproperly shield income or assetsfrom taxation. This can occur, forexample, when a taxpayer movesassets or income to a tax-exemptsupporting organization or donor-advised fund but maintains control

over the assets or income, therebyobtaining a tax deduction withouttransferring a commensurate benefitto charity.

Offshore TransactionsDespite a crackdown by the IRS

and state tax agencies, individualscontinue to try to avoid U.S. taxes byillegally hiding income in offshorebank and brokerage accounts orusing offshore credit cards, wiretransfers, foreign trusts, employeeleasing schemes, private annuities orlife insurance to do so.

Employment Tax EvasionThe IRS has seen a number of

illegal schemes that instructemployers not to withhold federalincome tax from wages paid toemployees.

CONTINUED from Page 3: Don’t fall for these tax scams... CONTINUED from Page 5:Tips for choosing a taxpreparer

If you have Internet access, youmay be able to get free taxpreparation and electronic filing atwww.icanefile.org.

• Wait just a bit longer – Do youreally have to get cash from your taxrefund today? Can you wait a fewweeks to save almost $100?

If you have an urgent bill to pay,ask for more time until the tax refundcheck comes from the IRS. Don’t takeon a new expensive debt to pay anold bill.

• Avoid check cashers – Checkcashers charge an extra fee to cashRAL and tax refund checks.

Some check cashers charge up to7% to cash a RAL check – the averageis about 3%. If you receive a $2,000refund it would cost you an averageof $60 to cash the RAL check on topof the RAL and tax preparation fees.A smarter move is to use a bankaccount.

CONTINUED from Page 2:Avoid using refundanticipation loans...

CONTINUED from Page 4:E-snare! IRS warns mostnew scams are through..."Fraud Department" in which therecipient is asked to complete an"investigation form," for which thereis a link contained in the e-mail,because of possible fraud that therecipient committed. It is believedthat clicking on the link may activatea Trojan horse.

May 31, 2007 — An e-mailpurporting to be from IRS CriminalInvestigation falsely states that theperson is under a criminal probe forsubmitting a false tax return to theCalifornia Franchise Tax Board.

The e-mail seeks to entice peopleto click on a link or open anattachment to learn moreinformation about the complaintagainst them.

The IRS warns people that the e-mail link and attachment is a Trojanhorse that can take over the person’scomputer hard drive and allow

scams. Remember, if it sounds toogood to be true, chances are it is.

The IRS can help many taxpayersprepare their own returns withoutthe assistance of a paid preparer.Before seeking a paid preparer,taxpayers might consider how muchinformation is available directly fromthe IRS through the IRS website.

Check out these helpful links:E-file for Individual Taxpayers

http://www.irs.gov/efile/article/0,,id=118508,00.html

Free Filehttp://www.irs.gov/efile/article/

0,,id=118986,00.html

Free Tax Return Preparationhttp://www.irs.gov/individuals/article/0,,id=107626,00.html

Unfortunately, unscrupulous taxreturn preparers do exist and cancause considerable financial andlegal problems for their clients.

Examples of improper actions byunscrupulous preparers include thepreparation and filing of false paperor electronic income tax returns thatclaim inflated personal or businessexpenses, false deductions,unallowable credits or excessiveexemptions.

Remember, no matter whoprepares a tax return, the taxpayeris legally responsible for all of theinformation on that tax return.

Report suspected tax fraud andabusive return preparers bycompleting Form 3949-A andmailing it or a letter with similarinformation to: Internal RevenueService Fresno, CA 93888


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regi

stra

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. Ca

llU

nite

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ayat

324-

2735

or

684-

9847

for m

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mily

wiz

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Copi

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e ac

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This

isno

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disc

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PRES

CRIP

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DRUG

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Dist

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Mem

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BIN:

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Expi

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12/3

1/201

2

Documents

Common Sense for Your Dollars and Cents | SCACPA Financial Literacy Outreach Initiatives