Identity Theft: Dirty Dozen Tax Scams 2016
Identity Theft: Tax Scams
With tax season upon us, the IRS has issued warnings that scam artists are on the prowl and they could be after you. They have again issued their list of the “Dirty Dozen” Tax Scams, this time identity theft tops the list. You can read about 2015’s number one, phone scams, in our post from last year. While identity theft can happen at any time of the year, many criminals take advantage of tax season to get their victims.
Tax-related identity theft happens when someone uses your social security number and personal information to file a tax return and claim a fraudulent refund. Although identity theft doesn’t only happen with regard to tax information, the IRS is often the first to notify victims that their identity has been stolen when they receive two distinct tax returns using the same social security number.
In past three years Criminal Investigation (CI) helped convict about 2,000 identity thieves. According to the IRS Newswire, the IRS started 776 identity theft related investigations, resulting in 774 sentencings through CI enforcement efforts. The average sentences for these crimes was 38 months in jail with the longest sentence being over 27 years.
What the IRS is Doing to Help Protect You
The new measures attack tax-related identity theft from multiple sides. Many changes will be invisible to you but invaluable to the IRS, states and tax industry in protecting you. Here are some important changes you may see.
- New Security Requirements
- There are new security requirements when you’re preparing your taxes online, especially when you sign in to your tax software account.
- Additional Information
- Some state returns may ask for additional identity information, such as your driver’s license number, to make sure it’s really you.
- Additional Reviews
- The IRS will still process nine out of 10 federal refunds within 21 days. States have their own refund processing timeframes that will vary, and some states may make additional reviews to ensure refunds are being issued properly.
You can learn more about the new IRS identity security changes here and by watching the video below.
How to Protect Yourself
- Only give out your social security number when necessary. Never give it over the phone or via email. The IRS will not ask you for your social security number over the phone or in an email so any email claiming to be from them is fake.
“We urge people to use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues because scams can take on many sophisticated forms. Keep your personal information secure by protecting your computers and only giving out your Social Security numbers when absolutely necessary.” -IRS Commissioner John Koskinen
- Always use security software with firewall and anti-virus protections. Make sure the security software is always turned on and can automatically update.
- Encrypt sensitive files such as tax records you store on your computer.
- Use strong passwords.
- Learn to recognize and avoid phishing emails. For more info on phishing check out our post Phishing: IRS Scams 2015
- Do not click on links or download attachments from unknown or suspicious emails.
- Protect your personal data. Make sure your tax records are secure and don’t regularly carry around your social security card.
If you think your identity has been stolen go to identitytheft.gov for help.
Top Five Problems with Trusts & Wills
Top Five Problems with Trusts & Wills
Today on my weekly radio show with Marty Schneider, “The Retirement Professor“, I answered questions about California estate planning and Living Trusts. Marty asked me what were the most common problems I see with estate planning. I answered him with my list of the top five problems with Trusts & Wills.
I see too many people who do not have proper documents when they become disabled or die. They may have some documents like a Will or Trust, but here are the top five problems with trusts and wills:
Trust Problem #1 – Funding – The Trust is empty – nothing put in the Trust. No property has been transferred into the Trust.
Solution: Fu
nd the Trust with Deeds, Power of Attorney, assignments, and transfer documents.
Trust Problem #2 – Un-Funding – House during refinance was pulled out of the Trust and not put back in. Most lenders will NOT put the house back in the Trust. You need to do it or have it done. If the house is not back in the Trust before you die or lose capacity, the probate court needs to get involved.
Solution: Fund the trust. Deed the house to the trustee of the trust.
Trust Problem #3 – Self prepared documents – not understanding the law and what they really need. Keep in mind that you will NEVER KNOW if the documents are right. When the time comes for the documents to be tested, you will be gone – mentally or physically.
Solution: Do your research, decide, and get the right documents prepared and signed.
Trust Problem #4 – Failure to plan for disability or incapacity. A disabled spouse is a huge problem, legally, because he or she will not be able to sign necessary documents if the house or assets need to be sold or financed in a pinch.
Solution: Get a Trust and a Power of Attorney.
Trust Problem #5 – Having no Will or Trust because you can not decide on who to list as personal representatives (Trustee, Guardian, or Executor)
Solution: You just need
to decide. The choice will never be perfect, but it will be 100% better than not deciding and leaving it up to a Judge.
The solution to all these top five problems with trusts & wills is understanding the law and your needs. Keep doing your research and ask questions until you understand, then decide and act.
www.GQLAW.com
Gary Quackenbush, California Attorney.
The Business Model Canvas
The Business Model Canvas
Now that we’ve spoken about the Business Idea Canvas, our next tool in line is the Business Model Canvas. This revolutionary tool is a simple, yet powerful method for setting structure to your business idea/new product/new branch of your existing business in order to understand your “business model.”
Well, that’s a catchy, often over used term, but what is a business model? Investopedia defines it as:
“The plan implemented by a company to generate revenue and make a profit from operations. The model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs.”
In short, your business model is the way you make money over and above what you have to spend to do it. And the business model canvas is a clearly organized and comprehensive way to sum that up.
Here’s a picture of a standard business model canvas template and a short explanation of each section:
- Customer Segments: Who are your customers? What do they think? See? Feel? Do?
- Value Propositions: What are you offering your customers? Why do customers want to buy/use it?
- Channels: How are these propositions promoted, sold and delivered?
- Customer Relationships: How do you interact with the customer through their ‘journey’?
- Revenue Streams: How does the business make money from the value propositions?
- Key Activities: What uniquely strategic things does the business have to do to deliver its proposition?
- Key Resources: What unique strategic assets must the business have to compete?
- Key Partnerships: Who is essential to work with to make this happen?
- Cost Structure: What are the business’ major cost drivers? How are they linked to revenue?
As you fill this out, scratch it up, run it by others and reiterate, you’ll start to really discover the core of your business–it’s business model. It will give legs to a new idea, keep direction for your company and help you as a manager to focus on the key components, the heart and soul, of what your company has to offer and what it needs to do to keep growing.
We hope this tool helps you to continue your success!
The Big Idea Canvas
The Big Idea Canvas
So you have this great idea to start a new product line, to make a new branch in the company or to start a brand new business. Well, does it have potential? That’s where the Big Idea Canvas comes in.
The Big Idea Canvas is a very useful tool to analyze any new or planned changes in your business model. It will take you through five main areas to discover your idea’s potential:
- Pain of the Customer – Who is your customer, what is their pain and how bad do they need your remedy?
- Potential of the Market – Is this a big enough problem to put real effort into?
- Prescription for the Pain – Now, what’s the idea? (This is the fun part!)
- Positioning in the Market – Who (if anyone) is out there trying to address this pain already, how are you different or where do you fit in?
- Path to the Exit – Do you plan to run this forever? If not, who can you sell to, get acquired by, partner with?
After considering these five key areas, you’re much better positioned to see what the real value is. It may reveal some big holes in the product or your thinking, but hopefully it reconfirms the serious viability of your venture.
This template can be downloaded and printed here or you can be accessed for an easy to use, automated web version by visiting http://bic.technium.com/ to generate your Big Idea Canvas. Check it out!
Once you feel like your idea is ready to pursue, the next step is the Business Model Canvas. Watch out for our upcoming post on the subject!
Tax Season 2016 Begins Tomorrow!
Let Tax Season 2016 Begin!
With the start of the new year comes the start of tax season! Are you ready for tax season 2016?
The IRS announced that the individual tax return fling season will begin tomorrow, Tuesday, January 19th and last a little longer than usual this year. While most tax seasons end on April 15th, this tax season 2106 will end on April 18th. This is due to the observance of Emancipation Day on Friday, April 15th. They expect over 150 million returns to be filed this tax season and to give refunds to more than seventy percent of those filers. Last year they gave out 109 million refunds, with the average refund being $2,797.
The IRS free file program opened Friday the 15th and is available online here. Taxpayers with household incomes of $62,000 or less can use the program. They say that seventy percent of America’s taxpayers qualify for the program. Free file is available thanks to commercial partners of the IRS.
Households with an income over $62,000 can use the free file fillable forms starting tomorrow, January 19th. The fillable forms are electronic versions of the paper forms for those who know how to do their taxes themselves. The forms do math but only offer basic guidance and can only be used to file your federal return.
The IRS says they are ready and prepared for help tax season 2016. “IRS employees have been working hard to get ready to help taxpayers this filing season,” IRS Commissioner John Koskinen said. “As part of our Security Summit initiative, the IRS has been working closely with the tax industry and state revenue departments to provide taxpayers with stronger protections against identity theft during the tax filing season.”
They encourage everyone to e-file and get their refund via direct deposit since those are the fastest and safest methods available to file and receive your refund. They expect that 4 out of 5 returns will be filed electronically and expect to give the same amount of refunds via direct deposit to taxpayer’s bank accounts.
They also remind taxpayers to turn to the web for help this tax season. They do plan to have more employees available to answer phone lines but still expect those lines to be very busy. The IRS.gov website should be the first stop for help and information.
For more information about this years tax season, check out the IRS website at IRS.govhttps://www.irs.gov
2016: A Year of Innovation
2016: A Year of Innovation
Innovation is quite the buzzword these days–and with good reason. In this fast changing, digital era, creative change is constantly happening in the business world. For some, being innovative or creative in a business environment may come easily, but what if you feel like you’re more of the “put your head down and get it done” kind of person?
Here’s what Jeffery Dyer, Hal Gregersen and Clayton Christensen have to say. As a result of an extensive study of some of the most innovative entrepreneurs in recent years they share:
“Our research led us to identify five ‘discovery skills’ that distinguish the most creative executives: associating, questioning, observing, experimenting, and networking. We found that innovative entrepreneurs (who are also CEOs) spend 50% more time on these discovery activities than do CEOs with no track record for innovation. Together, these skills make up what we call the innovator’s DNA. And the good news is, if you’re not born with it, you can cultivate it.”
Following is a brief description of these five skills.
Associating
This skill involves drawing connections between seemingly unrelated entities to uncover new ways of approaching a problem. Connections between different industries, the arts, science or even nature can uncover better ways of doing business.
Questioning
Can you imagine if Henry Ford never questioned the standard car assembly method? It’s highly doubtful Ford would have become the production powerhouse that it is today. Great innovators ask Why? Why not? and How can we make this better?
Observing
It’s key for every business owner to be on the job site, to see the final product and to speak with all levels of employees. But not only do great innovators watch their own way of doing business, but they discover new methods by observing success strategies of other companies using the associating skill discusses above.
Experimenting
This is the step after observation and results in intense learning. “Like scientists, innovative entrepreneurs actively try out new ideas by creating prototypes and launching pilots. (As Edison said, “I haven’t failed. I’ve simply found 10,000 ways that do not work.”) The world is their laboratory. Unlike observers, who intensely watch the world, experimenters construct interactive experiences and try to provoke unorthodox responses to see what insights emerge.”
Networking
This isn’t networking in the traditional sense, “unlike most executives—who network to access resources, to sell themselves or their companies, or to boost their careers— innovative entrepreneurs go out of their way to meet people with different kinds of ideas and perspectives to extend their own knowledge domains.” Networking in this sense is an incomparable method to foster innovation.
So as we approach this new year, let’s working on these five key skills of innovation: associating, questioning, observing, experimenting and networking. If we do, we can be at the forefront of change and make 2016 a year of innovation. Happy New Year!
Interest Rate Changes: What an Entrepreneur Needs to Know
Interest Rate Changes: What an Entrepreneur Needs to Know
We’ve all seen the headlines popping up on our news feeds, in the paper and in friendly conversations. But why should I care about the Fed changing it’s key interest rate? Well, here’s a brief overview of the implications of interest rate changes on your small business.
First off, the Fed’s decision to raise rates is a good sign. The Fed will only do this when it strongly believes the economy is very healthy and growing well. In fact, that’s one of the biggest reasons they raise rates. If the economy is expanding too fast, there is a high risk of inflation and thus the Fed decides to slow the economy; interest rate changes make that happen in two main ways.
Business Borrowing Costs
As key interest rates are moved up, loans become more expensive and investment capital requires a higher return. This means that businesses tend not to expand as much when rates are higher. Higher interest payments thin margins and can affect profits, thus reducing a businesses ability to re-invest.
Customer Disposable Income
On the consumer side, higher interest rates discourage borrowing and tend to lower customer’s “disposable income.” They borrow less on credit cards, spend more on increased car loans and mortgages and are more likely to save due to higher rates of return in interest earning accounts.
So, here are some recommendations on how to navigate this change in the business environment:
- Have a product or service that people want and spend some valuable time improving your value add
- Make a decent profit by keeping your expenses under control
- Manage your cash flow so you don’t have to borrow at a higher interest rate
- Although it might seem to make sense to borrow money now while interest rates are still low, keep in mind that most loans available to business owners have a variable, not a fixed, interest rate. This means that when the Fed hikes interest rates, the rates on your loan could go up as well.
Overall, interest rate changes can work out to having little more than small implications on your business but it is important to consider the possible effects. Keep running a good operation and offering great products and services and your business will keep growing strong.
10 Ways Successful People Stay Calm
10 Ways Successful People Stay Calm
Success Magazine recently published an article by writer Travis Bradberry detailing the 10 ways successful people stay calm. Since staying calm under pressure is highly important for success in your field, we thought we’d highlight a few of our favorite tips here on the GQ Law blog.
Bradberry writes “The ability to manage your emotions and remain calm under pressure has a direct link to your performance.” TalentSmart conducted a study with more than a million people. Ninety percent of the highest performers out of the million people were good at managing their emotions under stress, they could remain calm and keep control even when stress was high.
A Yale study found that prolonged stress essentially leads to the shrinking of an area in the brain responsible for self-control. That said, stress is also necessary. We need to feel stress so that we take action, moderate levels of stress actually lead us to our best performance. To summarize, long periods of high stress are bad, moderate stress that doesn’t stick around is good.
So, what are we supposed to do about stress? How do we keep our stress levels in the “perfect stress” zone, not too high, not to prolonged?
10 Ways to Stay Calm and Manage Stress
- Have and Attitude of Gratitude: Take time to think about what you’re thankful for. It will improve your overall mood. One of our staff members at GQ Law keeps a gratitude journal, they write at least one thing they are thankful for in the journal each day.
- Avoid asking “What if?” : “What if?” brings on a lot of stress and worry. Things can go many different ways but trying to walk down each possible road is unnecessary and super stressful.
- Stay Positive: Throughout the day take moments to consciously turn your thoughts to something positive. Think about your day so far and find one positive thing that happened. Some days that might just be that you got a couple green lights on the way in to work or a smile from a stranger while waiting for your lunch, other days you’ll be able to draw up a nice long list.
- Disconnect: You read that right and yes, we know its difficult. Disconnecting from technology can be magical! Try it. Turn off your phone, take a break from work, go on vacation and don’t check any emails. Even a short, true, break from technology can work wonders.
- Limit Caffeine: Drinking caffeine releases adrenaline, the stuff in your body that brings on your “fight or flight” response. When caffeine puts your body in an extra aroused state of stress you’re more likely to let your emotions take over your behavior. The cherry on top of the caffeine-makes-stress cake is that stress coming from caffeine is constant and takes quite a while to work its way out of your body. Just say no!
Click on over to success.com to get 6-10 of this awesome list. You won’t regret it.
Tax Tips: Giving Gifts to Charity
Tax Tips: Gifts to Charity
Tax Tips for Charitable Giving
- You must itemize your deductions in order to claim donations to charity.
- Give to qualified charities: You cannot deduct donations to charities not found on the IRS Select Check tool. Check it out here before you donate. You can deduct gifts to churches, synagogues, temples, mosques and government agencies, even if the Select Check tool does not list them.
- Keep records: You must have a bank record or written statement from the charity in order to deduct gift money on your tax return. Gifts of money include those made by cash, check, credit card, electronic funds transfer (direct draw from your bank account) or payroll deduction (taken directly from your paycheck). Bank records that qualify as proof of your donation include cancelled checks and bank or credit card statements. For payroll deductions, be sure to keep a copy of your W-2 or any other form your employer provides as proof of your donations. You also need an additional form for each deductable donation of $250 or more. This holds true whether the $250 donation is money or property.
- Household goods: Household goods donated to charity, including furniture, furnishings, electronics, appliances and linens, have to be in good-used condition to claim them as a deduction on your taxes.
- Do it before the year ends: You can deduct any charitable gift charged to a credit card before the end of the year, even if you do not pay off that charge until the following year. Checks must be mailed, but not cashed, in 2015 to count for this year.
To read more and get the complete list of IRS tips for deducting gifts to charity click here. Also be sure to check out their other tax tips throughout the website.
The Profit Cycle
The Profit Cycle
As a small business owner, investing in your people can sometimes seem far away from the bottom line. In this cycle, shared by Bob Nilsen, former President of Burger King and current CEO of Cafe Rio, the payoff of investment in employee training, morale and well-being is clear. Here’s a quick summary:
1. Invest in your people, helping them become trained and happy
2. Your people will treat your customers well
3. Satisfied customers generate sales
4. Sales generate profits
5. Profits can the be reinvested into your people, your customers, sales generating activities and profit generating activities–and thus success
This never ending, virtuous profit cycle is one that takes sacrifice. It’s hard to delay putting cash into advertising, websites or capital investments. But, this cycle has a powerful, compounding effect that in the long-run is much more meaningful, profitable and effective. Let’s put it to work today!