from Sasha Fitzpatrick

Sadly, identity theft happens throughout the year – but some identity thieves are particularly active during tax-filing season. How can you protect yourself?

One of the most important moves you can make is to be suspicious of requests by people or entities claiming to be from the Internal Revenue Service. You may receive phone calls, texts and emails, but these types of communication are often just “phishing” scams with one goal in mind: to capture your personal information. These phishers can be quite clever, sending emails that appear to contain the IRS logo or making calls that may even seem to be coming from the IRS. Don’t open any links or attachments to the emails and don’t answer the calls – and don’t be alarmed if the caller leaves a vaguely threatening voicemail, either asking for personal information, such as your Social Security number, or informing you of some debts you supposedly owe to the IRS that must be taken care of “immediately.”

In reality, the IRS will not initiate contact with you by phone, email, text message or social media to request personal or financial information, or to inquire about issues pertaining to your tax returns. Instead, the agency will first send you a letter. And if you’re unsure of the legitimacy of such a letter, contact the IRS directly at 800-829-1040.

Of course, not all scam artists are fake IRS representatives – some will pass themselves off as tax preparers. Fortunately, most tax preparers are honest, but it’s not too hard to find the dishonest ones who might ask you to sign a blank return, promise you a big refund before looking at your records or try to charge a fee based on the percentage of your return. Legitimate tax preparers will make no grand promises and will explain their fees upfront. Before hiring someone to do your taxes, find out their qualifications. The IRS provides some valuable tips for choosing a reputable tax preparer, but you can also ask your friends and relatives for referrals.

Another tax scam to watch out for is the fraudulent tax return – that is, someone filing a return in your name. To do so, a scammer would need your name, birthdate and Social Security number. If you’re already providing two of these pieces of information – your name and birthdate on social media, and you also include your birthplace – you could be making it easier for scam artists to somehow get the third. It’s a good idea to check your privacy settings and limit what you’re sharing publicly. You might also want to use a nickname and omit your last name, birthday and birthplace.

Here’s one more defensive measure: File your taxes as soon as you can. Identity thieves often strike early in the tax season, so they can file their bogus returns before their victims.

To learn more about tax scams, visit the IRS website (irs.gov) and search for the “Taxpayer Guide to Identity Theft.” This document describes some signs of identity theft and provides tips for what to do if you are victimized.

It’s unfortunate that identity theft exists, but by taking the proper precautions, you can help insulate yourself from this threat, even when tax season is over.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones. Member SIPC.

by Sasha Fitzpatrick

It’s human nature to want to make things easier for our loved ones – and to have great concern about adding any stress to their lives. In fact, 72 percent of retirees say that one of their biggest fears is becoming a burden on their families, according to the Edward Jones/Age Wave Four Pillars of the New Retirement study. How can you address this fear?

First, don’t panic. In all the years leading up to your retirement, there’s a lot you can do to help maintain your financial independence and avoid burdening your grown children or other family members. Consider these suggestions:

Increase contributions to your retirement plans and health savings account. The greater your financial resources, the greater your financial independence – and the less likely you would ever burden your family. So, contribute as much as you can afford to your IRA, your 401(k) or similar employer-sponsored retirement plan. At a minimum, put in enough to earn your employer’s matching contributions, if offered, and increase your contributions whenever your salary goes up. You may also want to contribute to a health savings account (HSA), if it’s available.

Invest for growth potential. If you start investing early enough, you’ll have a long time horizon, which means you’ll have the opportunity to take advantage of investments that offer growth potential. So, in all your investment vehicles – IRA, 401(k), HSA and whatever other accounts you may have – try to devote a reasonable percentage of your portfolio to growth-oriented investments, such as stocks and stock-based funds. Of course, there are no guarantees and you will undoubtedly see market fluctuations and downturns, but you can help reduce the impact of volatility by holding a diversified portfolio for the long term and periodically rebalancing it to help ensure it is aligned with your risk tolerance and time horizon. Keep in mind, though, that diversification does not ensure a profit or protect against loss in a declining market.

Protect yourself from long-term care costs. Even if you invest diligently for decades, your accumulated wealth could be jeopardized, and you could even become somewhat dependent on your family, if you ever need some type of long-term care, such as an extended stay in a nursing home or the services of a home health care aide. The likelihood of your needing such assistance is not insignificant, and the care can be quite expensive. In fact, the median cost for home health services is nearly $55,000 per year, while a private room in a nursing home can exceed $100,000, according to Genworth, an insurance company. To help protect yourself against these steep and rising costs, you may want to contact a financial professional, who can suggest an appropriate strategy, possibly involving various insurance options.

Create your estate plans. If you were ever to become incapacitated, you could end up imposing various burdens on your family. To guard against this possibility, you’ll want to ensure your estate plans contain key documents, such as a financial power of attorney and a health care directive.
It’s safe to say that no one ever wants to become a financial burden to their family. But putting appropriate strategies in place can go a long way toward helping avoid this outcome.

Edward Jones is a licensed insurance producer in all states and Washington, D.C. Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.

by Sasha Fitzpatrick

It’s been called the “Great Resignation” – the large number of Americans voluntarily leaving their jobs. If you plan to be part of it (ideally with another source of employment lined up), you’ll need to make the financial moves necessary to keep making progress toward your long-term goals.

Here’s some background: After a year in which the pandemic caused so many people to lose their jobs, the economy is opening back up, but the “quit rate” – the number of jobs people have voluntarily left – has been breaking records. Some economists say this high quit rate is because people are confident of getting better jobs, with higher pay and more flexibility to work at home, or because they are preparing to start their own business or join the gig economy.

If you’re thinking of joining this temporary migration from the workforce, how can you help ensure that you’ll be financially stable and can continue to make progress toward your long-term goals?

Your first move is to look clearly at your financial situation. As mentioned above, it’s best to have new employment in hand before you quit your job. Alternatively, perhaps you have a spouse or life partner who earns enough to sustain the two of you, or you’ve built up an emergency fund that gives you a cushion.

However, if your short-term income is less than you previously earned or you need to go without a paycheck for a while, could you still pay your bills? If you are strapped for cash, you might be tempted to tap into your 401(k) or other employer-sponsored retirement plan. But this move will generally result in taxes and, if you are younger than 59 ½, a 10 percent penalty as well. Because of this, and because your retirement accounts are designed to be a financial resource after you retire, think twice before dipping into these funds if you leave your current employer.

If your employer allows it, you can leave your money in the 401(k) so you’ll still be accumulating resources for retirement. You also have the option to roll those funds into an individual retirement account (IRA) or a new employer’s retirement plan.

And if you plan to work for yourself as a freelancer, consultant or business owner, you’ll still want to save toward retirement. Possible retirement plans for the self-employed include an “owner-only” 401(k), a SEP-IRA or a SIMPLE IRA, all of which may be relatively easy to establish and offer tax benefits. A financial advisor can help you find a retirement plan that’s appropriate for your needs.

Here’s something else to keep in mind – an emergency fund. As mentioned above, if you already have one, you’ll have some breathing room if you’re thinking of leaving your job and might have a temporary gap in income. But as the name suggests, an emergency fund is there to help cover unexpected costs, such as a major home repair, without forcing you to take out a loan, or cash out part of your longer-term investments. So, if you are planning to tap your emergency fund, work to restock it as soon as possible.

If you’re participating in the “Great Resignation,” it means you’re feeling positive about your future employment prospects, which is great. But you’ll want to support that optimism with a strong financial foundation.

Sasha Fitzpatrick can be contacted at EdwardJones Financial Advisor, 22 Common St., Waterville, ME 04901, or at sasha.fitzpatrick@edwardjones.com.

by Sasha Fitzpatrick

If you’ve heard of 529 plans, you might think they can only be used to help pay for college. And you wouldn’t be alone: Less than one-third of adults properly identified that a 529 plan can be used for more than just higher education, according to a survey by Morning Consult and Edward Jones. But what are these other expenses?

Before we get to them, let’s review the main benefits of 529 plans. Contribution limits are high and earnings can grow tax-free if withdrawals are used for qualified education expenses such as tuition and room and board. (Withdrawals for nonqualified distributions are subject to taxes and a 10 percent penalty on the earnings portion.) Plus, as the account owner, you maintain control of the plan, so you can switch beneficiaries to another qualified family member, if necessary.

Now, let’s consider the other uses of 529 plans, which have been made possible by various pieces of legislation over the past few years:

Student loan repayments – The average amount of student loan debt per borrower is well over $32,000, according to the Federal Reserve. So, many people welcomed the news that 529 plans could be used to repay student loans. There’s an aggregate lifetime limit of $10,000 in qualified student loan repayments per 529 plan beneficiary, plus $10,000 for each of the beneficiary’s siblings. Being able to use 529 plans to repay student loans gives you some flexibility if your family members have excess balances in their accounts.

K-12 expenses – A 529 plan can now be used to pay up to $10,000 per year in tuition expenses at private, public and religious elementary and secondary schools. This amount is per student, not per account. However, not all states allow 529 plans to be used for K-12 expenses – or to be technical, some states consider K-12 tuition to be a nonqualified 529 plan expense, which means the earnings portion of a 529 plan is subject to state income taxes and possibly a “recapture” of other state income tax breaks connected with 529 plan withdrawals. So, make sure you understand your state’s rules on K-12 expenses before taking money out of your 529 plan.

Apprenticeships – Not every child wants or needs to attend a college or university. And now, 529 funds can be used to pay for apprenticeship programs registered with the U.S. Department of Labor. These types of programs, which combine on-the-job training with classroom instruction, are offered at community colleges and trade schools. Once students complete their apprenticeships, they often go on to well-paying careers in a variety of fields. And since these types of programs are typically far less expensive than a four-year college degree, a 529 plan can have a particularly long reach.

The tax treatment of 529 plans for all these expenses can vary from state to state, so, if you move to another state after you’ve established your plan, you’ll want to know the rules. Even if you don’t move, it’s still a good idea to consult with your tax advisor about how 529 plan withdrawals will be treated.

Nonetheless, a 529 plan could be valuable to you in many ways. Consider how you might want to put it to work for you and your family.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones. Member SIPC.

Submitted by Sasha Fitzpatrick