Saving Tax-Free with an IRA
There are many ways to save for the future. You can contribute to your company’s 401(k) plan. You can put extra money into a savings account. You can even stuff extra cash into a coffee can. But one of the simplest and safest ways to save for retirement is by contributing to an Individual Retirement Account or IRA.
With an IRA, you pay no taxes on the amount you contribute in a particular year. And you pay no taxes on the interest the IRA accrues that year (so long as it stays in the IRA). In fact, the only time you pay taxes on your IRA is when you finally withdraw your money from it after you hit retirement age. And since many people believe that they will be in a lower tax bracket when they retire, this can mean that you pay less tax than if you had paid it as you contributed.
If you think you might benefit from an IRA, speak to a First Nebraska Bank financial planner for more information. Learn more here
Tax Advice Disclaimer
The information on this website should not be used in any actual transaction without the advice and guidance of a professional Tax Adviser who is familiar with all the relevant facts.
Although the information contained here is presented in good faith and believed to be correct, it is General in nature and is not intended as tax advice. Furthermore, the information contained herein may not be applicable to or suitable for the individuals’ specific circumstances or needs and may require consideration of other matters.
First Nebraska Bank assumes no obligation to inform any person of any changes in the tax law or other factors that could affect the information contained herein.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
Avoiding Tax Season Scams
The Internal Revenue Service has issued several recent consumer warnings on the fraudulent use of the IRS name or logo by scammers trying to gain access to consumers’ financial information in order to steal their identity and assets. When identity theft takes place over the Internet with the perpetrator masquerading as a legitimate entity, it is called phishing.
Phishing (as in "fishing for information" and "hooking" victims) is a scam in which Internet fraudsters send e–mail messages designed to trick unsuspecting victims into revealing personal and financial information. This information can then be used to steal the victims’ identity. Once the scammer has done this, he or she is free to apply for credit cards and loans in the victims’ names, ruining their credit along the way.
Phishing scams succeed because they look like legitimate e–mails to the untrained eye.
Current tax-related phishing scams include phony e–mails that claim to come from the IRS, enticing victims by telling them that they are due a tax refund.
So, this time of year, be extra–vigilant– and be extra-aware of any suspicious emails that claim to be from the IRS or any other tax governing entity promising you a refund.
Sticking to Your Financial Diet
Just as it is when it comes getting your body in shape, there are a variety of tips and tricks you can use to help keep your finances healthier in 2014.
Whether it’s incorporating new web and app–based technologies or tracking your daily spending... or simply just being better organized across the board, with a few simple steps (and the breaking of some bad habits), you can really improve your financial outlook–maybe even dramatically.
Check out this article for some great ideas on how to shape up your finances!
In the News
Would-be cyber-criminals often use real–world events to perpetrate their attacks. Public interests can help them determine what people are more likely to click on, making their attacks more successful. Here are a few ways current events can be used against you:
• Phishing Emails: can contain content that takes advantage of what people are currently talking about. Whether it’s pop culture or politics, email content that people find interesting is more likely to succeed when used for phishing purposes. Phishing scams can also be timed to coincide with specific events. For example, right now there are phishing emails circulating regarding Benefits and Open Enrollment.
•Googling: Attackers can use Google or other search engine results to their advantage. Whenever there is a major news story, hackers attempt to poison the search results to make their malicious page show up near the top of the list. So whenever there is big news going on, be careful of simply Googling the term and clicking the top links without checking where they go.
• Phone Scams: Believe it or not, these still exist–mainly because they are effective. Phone scams can often make use of things people are talking about–or are confused about–such as the new healthcare law or taxes.
So be smart and be vigilant. And remember, it takes two people to pull off a successful scam: the scammer AND the victim.
10 Tips For Holiday Shopping On a Budget
- Debit Instead of Credit
- Know Your Budget
- Don't Get Department Store Credit Cards
- Make a List
- Stock Up On Stock
- Pick a Card
- Browse the Net
- Free Gift Wrap
- Beware the Gift Receipt
- Debit Instead of Credit: Use debit instead of credit cards. A debit card automatically forces you to spend only what you have, and allows you to avoid paying interest. Leave the credit cards at home. Let's say that you go ahead and charge the $817 (that is the amount which the average American is planning on spending this holiday), and pay the minimum payment of $10 a month with an average annual percentage rate of 18 percent. It would take you 133 months to be rid of your debt. In that time, you will pay $840.83 in interest.
- Know Your Budget:Know your budget, and make it non-negotiable: $10 means $10, not $12. Be sure to keep a running log of what you spend.
- Don't Get Department Store Credit Cards:When you open up a new credit card, many retailers offer you a 10 or 15 percent savings on your first purchase. But that savings will quickly vanish if you don't pay off your credit card balance in full. Some retailers, like Marshall Fields, for instance, will hit their customers with annual percentage rates upward of 20 percent.
Do the Math: If you pay $100 for a blouse and take the 10 percent discount, you would pay $90. However, if you were unable to pay the balance by the due date, you would pay $18.90 in interest, assuming a 21 percent APR, which would completely wipe out your $10 savings. You are now paying $108.90 for the blouse that was originally priced at $100!
- Make a List:Make a detailed list of who you want to buy for, how much you want to spend, and which gifts you expect to buy. This keeps you focused.
- Pre-Shop:Do some research before you hit the stores. Call around and go online to find better deals. You should also try to consolidate to a few stores to cut down on transportation costs.
- Stock Up On Stock:Instead of gifts, buy stock directly from a company, which allows you to avoid the fees and hassles of a broker or online service. For children, it could be the start of a wonderful tradition that instills a legacy of saving. Plus, it is a great, educational stocking stuffer, if your child knows the company.
For example, you can buy stock directly from Mattel, Inc (which was selling at $20.28 earlier this week) for your nephew instead of the hot toy that he's sure to forget. Or buy your father-in-law a share of stock directly from Home Depot (selling at $25.45 a share earlier this week) instead of a new power drill. Consider it a present for the future.
- Pick a Card:Instead of giving an old-fashioned paper gift certificate, try a prepaid gift card, which works like a debit card. The money is loaded onto the card so that the person can get exactly what they want, but there a few things to watch out for. Sometimes the card company will charge the purchaser a fee. For instance, for a $25 gift card, some companies add an extra fee on top. If it's $5.95 for a $25 card, that means you have paid an interest rate of 23.8 percent.
- Browse the Net:Instead of browsing the racks, try going online to shop. Many retailers offer discounts that are only available online, and they sweeten deal by offering free shipping and no-hassle returns.
- Free Gift Wrap:: If the store you are shopping in has a free gift-wrapping service, take advantage of it. You can save so much money by not buying fancy gift-wrap that you can put your savings toward other gifts.
- Beware the Gift Receipt:Many stores offer gift receipts, which do not have a price on them, as a way for the gift recipient to bring the gift back, supposedly without knowing how much you spent. Don't go for it. Be bold and ask for an actual receipt with the real cost of the item on it, to make sure if someone's returning your gift, they get the full value, not just store credit or the price the day of return, which might be reduced. They're going to find out what gift cost anyway, so there's no need to hide behind gift receipt.
Shopping during the holiday season can present unique danger. Taking a few prevention measures can help keep your holiday season joyous.
The holiday season is a time when busy people can become careless and vulnerable to theft and other holiday crime. The following tips from the police department can help you be more careful, prepared and aware during the holiday season.
- Shop during daylight hours whenever possible. If you must shop at night, go with a friend or family member.
- Dress casually and comfortably.
- Avoid wearing expensive jewelry.
- Do not carry a purse or wallet, if possible.
- Always carry your driver's license or identification along with necessary cash, checks and/or a credit card you expect to use.
- Even though you are rushed and thinking about a thousand things, stay alert to your surroundings.
- Avoid carrying large amounts of cash.
- Pay for purchases with a check or credit card when possible.
- Keep cash in your front pocket.
- Notify the credit card issuer immediately if your credit card is lost, stolen or misused.
- Keep a record of all of your credit card numbers in a safe place at home.
- Be extra careful if you do carry a wallet or purse. They are the prime targets of criminals in crowded shopping areas, transportation terminals, bus stops, on buses and other rapid transit.
- Avoid overloading yourself with packages. It is important to have clear visibility and freedom of motion to avoid mishaps.
- Beware of strangers approaching you for any reason. At this time of year, con-artists may try various methods of distracting you with the intention of taking your money or belongings.
Is Your Money Safe From Cyber Thieves?
From banking to shopping to connecting with others, we live more of our lives online than at any other point in history. With that trend showing no signs of slowing, it's important to know what you can do to protect your money from those who want to steal it. Simple things like not sharing your PINs and passwords with anyone else can help. In honor of National Cyber Security Awareness Month, First Nebraska Bank offers these tips to help you protect yourself from becoming a victim of identity theft:
Don't share your secrets.
Don't provide your Social Security number or account information to anyone who contacts you online or over the phone. Protect your PINs and passwords and do not share them with anyone. Use a combination of letters and numbers for your passwords and change them periodically. Do not reveal sensitive or personal information on social networking sites.
Shred sensitive papers.
Shred receipts, banks statements and unused credit card offers before throwing them away.
Keep an eye out for missing mail.
Fraudsters look for monthly bank or credit card statements or other mail containing your financial information. Consider enrolling in online banking to reduce the likelihood of paper statements being stolen. Also, don't mail bills from your own mailbox with the flag up.
Monitor your credit report.
Order a free copy of your credit report every four months from one of the three credit reporting agencies at annualcreditreport.com.
Protect your computer.
Make sure the virus protection software on your computer is active and up to date. When conducting business online, make sure your browser's padlock or key icon is active. Also look for an "s" after the "http" to be sure the website is secure.
Protect your mobile device.
Use the passcode lock on your smartphone and other devices. This will make it more difficult for thieves to access your information if your device is lost or stolen. Before you donate, sell or trade your mobile device, be sure to wipe it using specialized software or using the manufacturer's recommended technique. Some software allows you to wipe your device remotely if it is lost or stolen.
Report any suspected fraud to your bank immediately.
10 Ways to Protect Your Smartphone From Hackers
Your mobile device provides convenient access to your email, bank and social media accounts. Unfortunately, it can potentially provide the same convenient access for criminals. First Nebraska Bank recommends following these tips to keep your information - and your money - safe.
- Use the passcode lock on your smartphone and other devices. This will make it more difficult for thieves to access your information if your device is lost or stolen.
- Log out completely when you finish a mobile banking session.
- Protect your phone from viruses and malicious software, or malware, just like you do for your computer by installing mobile security software.
- Use caution when downloading apps. Apps can contain malicious software, worms, and viruses. Beware of apps that ask for unnecessary "permissions."
- Download the updates for your phone and mobile apps regularly.
- Avoid storing sensitive information like passwords or a social security number on your mobile device.
- Tell your financial institution immediately if you change your phone number or lose your mobile device.
- Be aware of shoulder surfers. The most basic form of information theft is observation. Be aware of your surroundings especially when you're punching in sensitive information.
- Wipe your mobile device before you donate, sell or trade it using specialized software or using the manufacturer's recommended technique. Some software allows you to wipe your device remotely if it is lost or stolen.
- Report any suspected fraud to your bank immediately.
Tips for Improving Your Credit Score
The first step to acquiring a mortgage is ensuring that you have a good credit history, which helps secure a lower interest rate and lower monthly payments. During the housing boom, a score of 680 was enough to get a good interest rate, but today many lenders want a 740, or even a 760, to qualify for the best rates. To improve your credit score, the American Bankers Association advises that consumers:
Pay bills on time.
Payment history makes up 35 percent of your credit score, according to www.myfico.com. The longer you pay your bills on time the better your score. Avoid missed payments by putting as many of your bills on automatic pay as possible. Many banks offer automatic debits from accounts and online bill pay.
Don't close old, paid off accounts.
According to FICO, closing accounts can never help your score and can in fact damage it. Only apply for the credit you need. Keep this in mind the next time a retailer offers you 10 percent off if you open an account.
Talk to credit counselors if you're in trouble.
Using legitimate, non-profit credit counseling can help you manage your debt and won't hurt your credit score. But avoid debt settlement; it will hurt your score since you're paying less than you owe. For more information on debt management, contact the National Foundation for Consumer Credit (www.nfcc.org).
Evaluate your credit report annually.
Your credit report illustrates your credit performance, and it needs to be accurate so that you can apply for other loans - such as a mortgage. Everyone is entitled to receive a free copy of his or her credit report annually from each credit reporting agency, but you must go through the Federal Trade Commission's website at www.annualcreditreport.com, or call 1-877-322-8228.
Don't skim. Read the fine print.
A loan or credit card application is a contract, so read it thoroughly before signing. Be aware of introductory rates that expire, as well as the length of monthly billing cycles.
Set a budget and stick to it.
Developing a financial plan will help you keep your finances in order. Don't spend more than you can afford, and don't "max out" your cards. Never forget that credit isn't free money.
Don't jump at the first appealing offer. Compare rates and fees offered through mail solicitation, on the Internet, or at your local bank.
Our Best Tips for Online Safety
Computers have become such an important part of our lives - for accessing information, keeping in touch with friends and family, shopping, working, and other activities - that it's easy to overlook the risks of using them. We rely on computers so much that many of us neglect the importance of PC security to keep our passwords, credit card numbers, and other personal information safe from identity thieves. To help keep your computer and information safe, we've compiled a list of seven computer security tips to follow that can reduce your chances of being an identity theft victim by enhancing your PC's security:
Never open unsolicited e-mail.
Always delete unsolicited e-mail, and never, ever, click on a link in an e-mail from someone you don't know. Doing so could infect your computer with a virus.
Use strong passwords that are impossible for a thief to guess.
Use a different password for each login, and make sure that each password is a combination of upper- and lowercase letters, numbers, and symbols. People who use the same passwords for everything make it easy for thieves to steal their identities.
Install antivirus software and keep it updated.
There are many trusted antivirus programs online that people can download free or for a donation. Download at least three, run them at least once a week, and keep them updated. (McAfee®, Norton™ and AVG are just a few examples.)
Protect your computer with a firewall.
A computer firewall creates a virtual wall between your computer and thieves who want to access your personal information. Hardware and software firewalls help keep your computer safe when you're online.
Don't share your personal information online.
Social networks are fun and great for connecting with friends but thieves use them to trick people into providing their personal information. You wouldn't share your private information with a stranger on the street, so don't share it with a stranger online either, no matter how long you've "known" them.
Keep your operating system updated.
When your computer operating system tells you an update is available, install it as soon as possible and get in the habit of keeping it updated at all times.
Be wary of fake antivirus notifications and other scareware.
Antivirus viruses (a.k.a. "scareware") trick users into thinking that they have a computer virus in order to frighten them into providing their credit card information to download an "antivirus program" that will remove it. If you have scareware installed on your machine, disconnect your computer from the Internet, call a computer tech to remove it, and remember to never provide any personal information in the pop-ups that appear on your screen.
Buying into a Budget
The idea of living on a budget can seem tedious, restrictive and daunting. In reality, living by one is incredibly freeing. A simple, effective budget requires only three things: information, income and expenses.
Start with Your Income
What you use to create a budget is less important than the information you include. Use Excel, Word or a pen and paper to write down, in as much detail as possible all sources of income you have coming in to your home each month (salary, tips, child support, investment income, etc.). Subtract what you pay in taxes and underline or bold the final amount.
End with Your Expenses
Write down all your monthly expenses, starting with bills like rent/mortgage, utilities, credit cards, groceries, gas, etc. That amount should equal 40% or less of your pre-tax income. Then, record what you'd like to spend money on (saving, retirement, entertainment, shoes, vacation, etc.). Bold the final number and compare it with your income total. Your expenses should be less than your income. If they're not, cut until they are.
When it comes to shredding, the safest approach is to think of your home or business as a liquidation company - everything must go! Every day hackers and ne'er-do-wells find data in dumpsters that they can use to steal business and personal information. Shredding everything removes that possibility.
Shred Safe, Shred Often
There are a few things you can do in your office or at home to dramatically reduce the amount of information that makes it to the trash:
- Make shred receptacles accessible and convenient.
- Check individual trash cans at the end of each work day and dump all paper and media trash into the shred bin.
- Send tapes, CDs, disks, old credit cards and hard drives to the shred bin too!
Choose a shred company that processes more than just paper and make it easy for your employees or your family to keep your personal, financial information safe through shredding.