Tax Tips – July 2020
Q: I take a regular monthly or quarterly withdrawal from my retirement plan. Should I continue to do so?
A: Not if you don’t need the money to live on. The CARES Act provides a temporary waiver of required minimum distributions for 2020. If you would have had a required minimum distribution obligation for 2020, you do not have to take it if you don’t want to. If you don’t need to withdraw the funds, the tax result is lower taxes and a possible lower tax bracket leading to potential savings in other areas.
If you have already taken a withdrawal in 2020 that would have represented a required minimum distribution, you may be eligible to roll the money over within 60 days, subject to IRS rollover rules (including the 60-day rollover deadline and the IRA one rollover-per-365 day rule). Distributions from inherited IRAs are not eligible to be rolled over.
This is a complicated topic, so talk to your tax adviser before taking action.
Q: We are receiving many phone calls, text messages and emails asking for personal information such as social security numbers, user names and passwords, etc. How can we protect ourselves from these scams?
A: Avoid Wi-Fi hotspots. Wi-Fi hotspots are always unsecured connections, so you and potential hackers are hanging out in the same network bubble. It’s not difficult for one to tap into your activity and sniff out your personal information. Even if a hotspot requires a password or guides you through a login screen, you’re still at risk.
Search to verify who the sender represents, for example, your bank or credit card company. Look at emails to verify if the sender’s URL is legitimate.
Avoid phishing emails. What does that mean? Phishing emails occur when an attacker, masquerading as a trusted entity, dupes a victim into opening an email, instant message, or text message.
Make sure passwords are strong. Passwords should be changed periodically. Use multiple-factor authentication, if available.
Use virtual private networks instead
A virtual private network allows you to create a secure connection to another network over the internet. VPNs can be used to access region-restricted websites, shield your browsing activity from prying eyes on public Wi-Fi, and more. They are an excellent alternative to public Wi-Fi networks. While they cost some money, the peace of mind and additional security is well worth it.
Invest in an unlimited data plan
Most of the time, individuals find themselves hastily connecting to public Wi-Fi networks to save themselves from overage charges on their phone bills. But your mobile is just as likely to be attacked as your laptop, if not more.
Investing in an unlimited data plan will not only eliminate your need for accessing insecure Wi-Fi networks but it will also often allow you to use your mobile device to create a personal internet “hotspot,” meaning a VPN connection wouldn’t even be necessary.
Q: During the pandemic, we are trying to avoid going into banks as much as possible. Is it still safe to use online banking?
A: Online banking is typically safe. However, there are risks out there, and one of them is using public networks. If you need to get online, try to wait until you are on a trusted network – whether you’re checking your bank account or the weather.
Don’t access personal bank accounts or sensitive personal data on an unsecured public network. Even secured networks can be risky. Use your best judgment if you must access these accounts on public Wi-Fi. LL
This article has been presented by PBS Tax and Bookkeeping Service, a company that has been providing income tax and bookkeeping services to the trucking industry for over a quarter century. If you would like further information, please contact them at 800-697-5153. Visit their website at PBSTax.com.
Everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult with your own tax or accounting professional.