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Parents: Help Your New Grad Manage That Graduation Gift Money

Brendan — Fri, 14 Jun 2013 16:59:00 +0000

Finally, it's official: After years of studying, sacrificing and possibly incurring student debt, your kid has (finally!) graduated from college. In honor of this milestone, you've organized a party for your new grad. Most of the presents are graduation gift money with the exception of the gift from his new favorite relative, who couldn't make the get-together. He sends a card along saying as an alternative to money, he’s going to pay your kid's cable bill for the next year. As a parent, what advice should you give to your new graduate for what to do with all this money? Chances are, after four years of higher education, your child wants to reward him or herself by purchasing something special. However, it's wise not to spend it all on one luxury item. While there's nothing wrong with a reward, say a new TV, a computer or a vacation, why not take some of the money and put it to work for the future? Here are some tips you can pass along for saving money and making investments: Pay Off Debt It's no secret that a college diploma is expensive. Two-thirds of graduates take out loans, with the average American student's debt topping more than $23,000. Using graduation money to pay off some portion of college loans or credit card debts may be the smartest way for a new grad to celebrate their newfound independence. Secure Transportation They’re probably not going to buy a house fresh out of college, but investing in and maintaining a reliable vehicle is a possibility. Although public transportation is an option in some major metropolitan areas, still nearly 80 percent of Americans drive to work. If your graduate puts money aside to buy a car or keep it in good working shape, then they could be making an investment with huge dividends if they do secure a job requiring a car to commute to work. Save for the Future If investing graduation money is an option, your son or daughter will need to have a financial plan in mind. In other words, you should help them do some research before making a decision that could tie up their money or cause them to lose a good percentage of it to penalties or depreciation. There are numerous investment ideas to choose from. Traditional forms of savings, such as Treasury Bonds and Individual Retirement Accounts (IRAs), may not give them the yield or freedom to access their money that they’d like. And blindly investing in the stock market can be a dangerous game if you (or they) don’t know what they’re doing.

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While opening a mutual fund with an investment company used to require an initial investment of several thousand dollars, today several fund companies in pursuit of younger investors have decreased their initial investment minimum to $1,000. Don’t be afraid to ask for financial advice from a bank or employer if it's offered. Listen to the professionals and then help your son or daughter decide how they want to save. Retirement Plans Chances are, they’ve just finished up classes and have only recently begun interviewing for their first big job, so a retirement plan is probably the farthest thing from their mind. However, it's never too early to start planning. According to Gallup's Annual Economy and Personal Finance survey, workers in the 1990s expected to retire at 60. Today, most workers don't expect to retire until they're 67. If your new grad wants to retire at any age, they're going to need a retirement plan they can count on. Once they’ve landed a job, they should consider putting some of their salary—and even graduation money—into an employer sponsored 401(k), or open their own IRA. Though retirement may seem like a distant dream, help them talk to their (your) tax preparer to find out how much sense it makes to begin putting some pre-tax money aside. You’ll both be one step closer to the golf green of your retirement dreams. How your fully-grown children use, save or invest graduation money can have a positive impact on post-college life. Whether it's paying off student loans, saving for a car or opening a mutual fund, help your son or daughter choose the option with a payoff that fits their foreseeable future.

Deconstructing High Gas Prices

Jen — Tue, 11 Jun 2013 15:06:34 +0000

Every driver has been there: You pull up to the pump, swipe your credit card and then recoil from the final cost of filling up your tank.

Our wallets are feeling the strain of increased fuel costs, but what exactly are we paying for when our cars guzzle up gallons of gas? And how does the rising price of gas spill over into the costs of other products?

The Basics

Ken Cohen at Exxon Mobile's Perspectives blog breaks down exactly what we're paying for in a gallon of gasoline, beginning with the cost of raw materials. As you might expect, the cost of crude oil is the biggest single expense in a gallon of gas. That Perspectives post breaks down the component costs of a gallon of gas that costs $3.27. (According to the Gas Price Locator, as of June 12, 2013, the national average is up to $3.57 per gallon). Of that amount, a hefty $2.55 goes toward crude oil, which then needs to be refined. That's why in the long term, the biggest hope for mitigating gas costs is innovations in fuel-efficient vehicles. Of course, you could just sit at home all day doing nothing and save big. But for those who need to head out onto the open road, fuel-efficient vehicles are the best bet for your wallet. According to that Perspectives post, the cost of covering taxes amounts to (on average) another 39 cents, while distributing and marketing the product adds 33 cents to the price tag.

The Trickle-Down Effect

The shipping industry feels the pinch more than most, and the increased cost of fuel is often passed on to consumers.

Rising gas costs don't just affect us at the pump. The shipping industry feels the pinch more than most, and the increased cost of fuel is often passed on to consumers. Brandon Gale of Retail Shipping Associates told the New York Times in 2011 that the clock was ticking on how long it would be before high gas prices filtered down to customers. UPS spokesman Dan McMackin went a step further, directly telling the International Business Times that high gas costs were reflected in the increased prices of their services. You're paying more to get a package delivered than you were a few years ago, and that increase is mostly due to the price hikes at your local gas station. Moreover, stores that need to pay more to get their products shipped -- everything from groceries to electronics -- raise prices, in turn, to recoup those costs. It's not all bad news: A recent Forbes report claims we’re in better shape to withstand rising gas prices this year, citing a strengthening economy and a recovering job market to help soften the blow. Still, those eBay bargains you're eyeing will be pricey to ship.

Take a Look Around

To get an idea of how much you're paying for gas relative to other products, it's worth using this comparison tool provided by the Bureau of Labor Statistics. Here, the average consumer price for a number of products is provided, including a gallon of gas, a loaf of bread, a dozen eggs, and even a whole chicken. According to that data, a gallon of milk cost an average of $3.428 in April 2013, compared to $3.59 for a gallon of regular unleaded in the same month. Unfortunately you can't (yet) power your vehicle by milk. In contrast to those figures, water costs much less per gallon. Detroit residents, for example, pay about a penny for 5 gallons of tap water; in Madison, Wis., 1,000 gallons of water cost about $2.81. Now all we have to do is wait for the first water-fueled car to come along so we can take to the highway with a lot less stress on our minds.

5 Ways to Make Your College Summer Break Productive

MovingInsider — Tue, 04 Jun 2013 11:02:43 +0000

After a full academic year of intense study, and one last push through final exams, most college students can’t wait for summer break. Thoughts of days that don’t require study, fun with family and friends, and perhaps, plans for travel fill the minds of those ready for a few months of relaxation. Of course, there is nothing wrong with a college student spending the summer months idle; however, it’s possible to make a college summer break an industrious time—full of productivity. Here are five great ways you can maximize the value of your summer break:

Land a solid internship that is worth its weight in gold.

With the economy continuing in "recovery" mode and persistently high unemployment rates, recent college graduates have encountered difficulties in getting hired due to a lack of experience. Landing an internship in a field related to your major or career aspiration may separate you from the pack. In some cases, after graduation, the company may even offer you a full-time position.

Donate your time to enhance the lives of others.

Charitable organizations are always looking for positive and energetic individuals to contribute their time and talents. Giving your time to a charity will likely be a part-time commitment where you can still make a noteworthy impact in the lives of others, and gain experience working with an organization. Further, it can be a place where you can develop useful contacts; most non-profit advisory boards are full of individuals who are well-connected in the business world.

Earn some extra cash while gaining work experience.

Search for seasonal job options that can provide a respectable source of income for the summer months. You will gain valuable work experience that may benefit you when it comes time for your post-graduation job search; plus, saving these earnings can provide you with cash reserves that could be used as a recreational fund for the next academic year.

Conduct research now to make your life better later.

Many college graduates will be responsible for paying back varying amounts of student loans. According to a report from the Institute for College Access & Success' Project on Student Debt, the average college senior will graduate with nearly $27,000 in debt. By reaching out to your school’s financial aid office and embarking on a thorough research quest, you might be able to lower the expected amount owed. Each year, new grants, programs and scholarship opportunities are being offered. It’s very possible that you could lower your student loan amounts with research and diligence.

Take on the project you’ve been putting off.

The school year likely keeps your schedule full, leaving you little time to focus on the activities, projects, and hobbies that enrich you as a person. The focus of your college experience is to grow academically, but also flourish personally. Use the break from full schedules and studying to put in some hours with your favorite activity or overdue task. Maybe this means spending the time on your bicycle checking out some new trails, or getting your dorm room organized (with a system in place to keep it that way). Make a list of all of the things you put off when school is in session and select a few that will improve your life. However you choose to spend your college summer break, make it something that is meaningful and beneficial to you. Once you move back to campus in the fall, you’ll be refreshed and ready for the semester. As you graduate and enter the job market, the chance that you will have such a significant span of time to focus may become slimmer. Take full advantage of your final years of college by seeking treasured experiences that you will never forget. What is your favorite productive way to spend college break? Have you done any of these activities over your summer break? Let us know below in the comments section. This post comes from the editors at Movinginsider.com; your resource for everything related to moving, storage and organization. Recommended by the editors:

Financial Protection When You’re Between Jobs

Brendan — Thu, 16 May 2013 11:00:03 +0000

When you’re between jobs—whether due to a layoff or a decision to leave—you may have special financial challenges to consider. Your income is likely less than it was while you were working, but that doesn’t have to mean derailing your retirement goals or foregoing insurance. There are some strategies that can help you keep your retirement savings and insurance coverage working for you, even when you’re not. Retirement Savings When you leave a job (voluntarily or otherwise), you typically have a few options for the 401(k) at your old employer. If the employer allows it, you can leave the funds where they are. Another option is to roll over your 401(k) into an Individual Retirement Account (IRA) so that the money continues working for you in a tax-deferred manner. Liquidating your 401(k) is an option but there may be tax implications and early distribution penalties. It is best to consult your tax professional before making any distribution decisions. To continue contributing to an IRA or 401(k), you need earned income, such as a salary or profits from a small business. Unemployment benefits are not considered earned income by the IRS, so if that’s your only source of income, you would have to temporarily pause contributions to your IRA or 401(k). However, if your spouse has earned income, he or she could potentially bump up retirement contributions to compensate. If you re-enter the job market, you could resume contributions to your own retirement account. If you’re 50 or older, you can also make catch-up contributions to a 401(k). Insurance Depending on the size of the company, employees who are laid off or leave a job voluntarily often have the right to continue their health care coverage for a specified period of time through COBRA. However, health insurance doesn’t cover everything, especially in the case of an accident or serious illness, so a supplemental health insurance policy could help fill coverage gaps such as co-pays, deductibles and non-medical care (transportation to treatment, for instance). Knowing your medical costs would be covered can help provide peace of mind during an uncertain time. Premiums for supplemental health insurance can start as low as $20 per month. Life insurance is another area to consider. If you had a policy through your previous employer, you may want to consider buying an individual policy to ensure that your family would be able to cover their daily expenses if the unthinkable happened. A permanent life insurance policy can accumulate cash value over time so that you might be able to take a loan or withdrawal if needed. Want to know more about your retirement and insurance options? Contact an Allstate personal financial representative to discuss your needs.

How to Start Improving Your Credit Health Right Now

Bethy Hardeman, CreditKarma — Wed, 24 Apr 2013 11:00:41 +0000

You might not think about your credit that often, but when it comes time to apply for a loan it’s a top priority. The thing is, if you wait until that moment to concern yourself with your credit health, it’ll may be too late to do anything about it.

So instead of waiting until you need it, anticipate that someday you’ll probably apply for a mortgage or auto loan—or even a credit card—and take a few steps to start improving your credit health today.

Get rid of credit errors.

Get in the habit of checking your credit report on an annual basis to make sure that it is accurate.

Check your three, free credit reports from AnnualCreditReport.com. You’re entitled to these once per year. After you’ve pulled your reports, go through them thoroughly to check for errors. You should look out for things like accounts you don’t recognize, late payments on accounts you’ve always paid on time, erroneous derogatory marks and even incorrect personal information. Small errors, like a wrongly reported mailing address, shouldn’t affect your credit score. But an incorrectly reported account could.

If you spot an error, use the FTC’s guidelines for disputing it with the credit bureau. If that doesn’t work, you can also go directly to the information provider to see if they’ll stop reporting the incorrect information.

Spot future errors early on by getting a credit monitoring service, like Credit Karma’s free one. You’ll be alerted to important changes on your credit report and can act quickly if you don’t recognize them.

Get a higher limit.

One of the most important factors of your credit score is your average credit card utilization rate. This percentage shows creditors how much of your available credit you’re using. Ideally, you should keep this number to less than 30 percent for good credit health.

One way to ensure your credit utilization stays low is to get higher credit limits on your credit cards. This should not lead you to spend more on your cards; it should just give you a nice buffer to stay well below a 30 percent utilization rate.

Most credit card issuers review and raise credit limits every six months or so. If it’s been a while since your last credit limit increase, try the direct approach. Call up your credit card company to request one, calling out your responsible credit behavior. Keep in mind that a request like this can sometimes result in a hard credit inquiry, which will ding your score a few points.

Use your old credit cards.

Unless you have a really good reason for closing out an old credit card account—like a high annual fee, for instance—keep these cards open and active. Creditors like to see long credit histories, especially if they’re clean. But it’s not enough to just keep old cards open; you also have to use them. The reason for this is that some credit card companies will close out inactive cards or at least stop reporting them to the credit bureaus. This can unexpectedly reduce your utilization rate, too.

Make a small purchase or two on your oldest card, or set up a recurring charge like a gym membership. Just make sure to pay off the balance each month.

Bottom Line: This should give you a good start in improving your credit health. Of course, make all of your bill payments on time; that’s the best way to maintain good credit health once you have it.

Bethy Hardeman writes on credit, personal finance and the economy for CreditKarma.com, a free credit management website that helps more than 8 million people access their credit score for free.

Bethy Hardeman is not an Allstate employee and does not represent Allstate. She did not receive monetary compensation for this post.

4 Ways to Use Your Tax Refund Wisely [INFOGRAPHIC]

Brendan — Fri, 12 Apr 2013 17:00:32 +0000

Tax time may not actually be 'fun,' but once the process of filling out all those forms is completed, dotting the Is and crossing the Ts, many of us have a refund coming our way. With the average tax refund near $3,000, it's important to put that money to use in the best way possible. For some that means paying down credit cards, for others it means putting it toward retirement. In any case, many options should be considered and evaluated. Here's a brief look at 4 wise ways to use that money.

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Stump the Identity Thief: 7 Tips to Create a Strong Password

Melissa — Thu, 21 Mar 2013 11:00:12 +0000

According to the Internal Revenue Service, identity theft and credit card fraud are growing global concerns. From phishing scams to sophisticated hacking rings, cyber thieves continue to develop creative ways to compromise your personal information. Internet security can be tenuous and, at times, easily breached, and both the IRS and Federal Trade Commission recommend you safeguard your personal information with a strong password. Here are seven password tips that will help you stump an identity thief and keep your information and financial accounts protected. 1. Don't use your dog's name. The IRS suggests that you refrain from using any personal information in your password. That includes Social Security numbers, maiden names, birthdays, anniversaries, the names of children, pets, or anything else that can be guessed, researched or discovered by a hacker. 2. Make them hunt through the "haystack." Steve Gibson, security expert and president of Gibson Research, suggests using a password that is long and contains upper-case and lower-case letters and special characters. Using various types of characters in a long password increases the number of combinations a hacker has to try in order to crack your password. Gibson likens these attempts to figure out your password to finding a needle in a haystack; so, to hide that needle, you should use more characters, and characters of different types, to make the "haystack" larger. 3. Old passwords = vulnerable. According to the United States Computer Emergency Readiness Team (USCERT), it’s a good idea to change your password on a regular basis, especially after accessing accounts via a public computer. If you keep the same password to a certain website for many years, identity thieves have that much more opportunity to decode it. A rule of thumb is to change your password every 45 days. It's especially important to change your password after using it on a public computer, because browsers on public computers can, in some cases, store your passwords, making them vulnerable to theft. 4. Try a pass phrase. If you feel your memory is sharp, then consider creating a pass phrase. A pass phrase is a long string of unrelated letters, numbers and punctuation marks. While a pass phrase can be difficult for a user to remember, this type of password is also very difficult to crack. 5. Use a sentence. If you don't think you're going to be able to remember a cryptic string of characters, one idea is to think of your password as a sentence and then use the first letter of every word, mixing in caps and lower-case letters and a few numbers that you can remember, as the actual password. 6. Memorize all passwords. Do not store the information in a wallet, in a purse or on a cellphone. If you need to write the password down, be sure it’s stored in a secure location. 7. Do not use the same password for work and personal accounts. In fact, the USCERT recommends that you use a different password for each website account you access. That way, if one of these passwords becomes compromised, the thief will not have access to a second account. While identity theft and credit card fraud are a risk, you don't need to feel vulnerable or unprotected. Use these seven tips to create a strong password, and you'll not only stand a better chance of stumping an identity thief, but you could also give yourself greater peace of mind when it comes to Internet security.

5 Quick & Easy Strategies to Save More for Retirement

Admin — Wed, 13 Mar 2013 11:00:39 +0000

According to the Employee Benefit Research Institute, almost one-third of all Americans have less than $1,000 set aside for retirement and more than half have less than $10,000. This is surprising in light of the fact that many experts warn that your future Social Security income--a traditional form of retirement income--may not be enough. Saving for retirement, or saving more, is really not something to put off. Consider these five strategies to boost your retirement portfolio today: 1. Put Yourself on a Budget If you don't know where you are financially, you'll have a hard time getting to where you want to be. The solution is to budget, and it's easier than you might think. Use an online tool, such as Mint, or simply list all of your income and expenses in a spreadsheet or on paper. True, collecting your monthly statements, such as credit card and bank statements, and bills, may take a few minutes, but it's worth the effort. Then, review your expenses to see where you can cut back, and set monthly limits for each spending category. Deposit what you save into a Roth or traditional IRA, or increase your contribution to your 401(k) at work.

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2. Clip Coupons to Save on Groceries According to the Department of Agriculture, the average American household spends as much as $1,200 per month on food. This means that if you reduce your food bill by 20 percent, you could save almost $3,000 per year. One good way to save is to clip coupons. Even if you don't take it to the extreme, regular couponing can translate into serious savings. Check the Sunday paper for coupons, sign up for your grocery store's loyalty program, and match coupons to in-store sales and incentives to get the biggest bang for your buck. 3. Generate Extra Income Consider reallocating the time you spend watching TV or posting on Facebook. You might consider selling unneeded items on the Internet, or even filling out paid surveys online. Or consider starting your own consulting business specializing in an area of your expertise. 4. Review Your Monthly Bills Review all of your monthly bills and look for ways to cut back, including negotiating extra fees and charges. Also, use the Internet to research less expensive options for your cable TV, cell phone and other monthly services. If you're not currently bundling, investigate this option, too. 5. Eliminate Credit Card Debt According to the Federal Reserve, the average American carries roughly $7,000 in credit card debt, which can result in significant interest payments. Consider your credit card's APR and the amount you end up paying every year in interest, and think how much you could save by paying off your credit card debt. Final Thoughts There are two chief components to saving more for retirement: One is to save more money, and the other is to actually deposit what you save into a designated retirement account. If you haven't already, open an IRA, a Roth IRA (if you qualify), or deposit more of your income into your 401(k) at work. A great way not to be tempted to spend what you save is to set up automatic deposits into your retirement account on a monthly basis. Remember, if you make early withdrawals (before you turn 59 1/2) from a 401(k) or traditional IRA you may be penalized. However, you can withdraw contributions made into a Roth IRA at any time without penalty. What other ways to save more for retirement can you share? David Bakke is a contributor for MoneyCrashers.com. He was once buried in more than $30,000 of credit card debt, and now shares his story and tips for smart money management. Recommended by the editors:

Tax Day: Are My Medical Expenses Deductible?

Brendan — Tue, 05 Mar 2013 12:00:31 +0000

Tax day is approaching quickly, so you may be searching for the correct ways to trim your IRS bill or increase your tax refund. Be sure not to overlook medical and dental expenses. According to the IRS, expenses associated with the “diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body” may be eligible for deduction. But how do you know which expenses are fair game – and which cannot be deducted? What about the Health Coverage Tax Credit? Here are some answers to four of the most common questions:

What medical expenses can I deduct that I may not have known about?

The following are examples of expenses that you can deduct:

Weight loss programs if the program is recommended by a physician following a diagnosis of obesity, heart disease, hypertension or another medical condition.
The cost of transportation to another city if the purpose of the trip is to receive medical services. An additional $50 per night is allowable for an additional person, such as a spouse or a parent traveling with a sick child.
Smoking cessation programs, including medication requiring a prescription. However, drugs that do not require a prescription, such as nicotine gum, are not eligible for deduction.
The cost of birth control prescribed by a doctor.
A wheelchair that is used primarily for sickness or disability.
A wig purchased following the loss of hair from treatment, such as chemotherapy.

What expenses can I not deduct that I may have thought were eligible?

The following are examples of expenses that you cannot deduct:

Health insurance costs that are eligible for the Health Coverage Tax Credit (HCTC).
Medicine or drugs purchased or shipped from other countries.
Health club or gym membership dues.
Controlled substances, including medical marijuana, where legalized by state law.
Medical expenses that are reimbursed by a Flexible Spending Account (FSA) or Health Savings Account (HSA).
Expenses associated with housekeeping help, even if this help is recommended by a doctor. Some expenses, such as nursing services and long-term care may be deductible.
Weight loss programs if the purpose of the program is for general health, physical appearance improvement or self-esteem improvement.
Special diet food and beverages, even if you have been diagnosed with a specific medical condition requiring weight loss.

Can I deduct health insurance costs if I am self-employed?

If you are self-employed, you may be able to deduct health insurance costs as an adjustment to your income. These costs include insurance payments for yourself, a spouse and children under the age of 27. However, you cannot deduct insurance costs for any month in which you were eligible to participate in an insurance plan subsidized by your spouse’s employer. To determine your deduction amount, use the Health Insurance Deduction Worksheet in the Form 1040 instructions.

Do I qualify for the Health Coverage Tax Credit (HCTC)?

According to the IRS, HCTC covers 72.5 percent of qualified health insurance premiums for eligible individuals and their families. This credit is available on a monthly basis to cover premiums, or it may be taken on a yearly basis when filing an income tax return. HCTC covers displaced workers, individuals receiving benefits from the Pension Benefit Guaranty Corporation (PBGC) that are 55 years old or older, and individuals who have lost health insurance coverage at work. COBRA continuation coverage, coverage under a non-group (individual) health plan, and certain state health insurance plans may qualify. Proper life insurance can also help protect you and your family, including your finances, when an unpredictable health issue/expense arises. For more information on deducting medical expenses, consult IRS publication 502 available at IRS.gov, or talk to your tax preparer.

5 Tips to Protect Your Identity at Tax Time

Melissa — Thu, 28 Feb 2013 12:00:23 +0000

Whether you owe money or are expecting a refund, preparing your tax return on your own or hiring a professional, tax time can be, well, taxing. The last thing you probably want to worry about is identity thieves tapping into your financial accounts, opening new lines of credit or committing other types of theft or fraud. But according to Identity Theft 911, tax season is a prime opportunity for identity thieves. W-2s and other Internal Revenue Service tax forms contain a wealth of information--everything from Social Security numbers to financial account information--that can be a target for resourceful criminals. Protecting your identity, however, doesn't have to be difficult. Follow these simple steps to help safeguard your personal information from hackers and identity thieves during tax season. 1. Be vigilant with your information online. According to the IRS, impersonation schemes thrive during tax season. This is when thieves claiming to represent the IRS send emails, make phone calls or send traditional mail in an attempt to steal people's Social Security numbers or other sensitive personal information. However, it's important to remember that the IRS says it does not contact people by email or social media, so, if you're the recipient of any electronic messages, you should know that they are fraudulent. If you suspect that a piece of mail you’ve received is part of a scam, you can visit IRS.gov for information on how to determine whether it is authentic. 2. Keep an eye on your mailbox. While cyber-crime has become many thieves’ preferred method of obtaining personal information, it's still important to closely monitor your mailbox. All official tax forms are delivered by mail, and some thieves find it easier to simply open someone's mailbox and steal their forms than figure out Internet passwords in order to reap personal information. 3. Leave your Social Security card at home. According to the IRS, you should not, at any time, carry your Social Security card in your wallet or purse. The card should be kept in a safe place, preferably in a safe-deposit box or another secure location. If your Social Security card is in your wallet and your wallet is stolen, then it’s possible your personal information can fall into the hands of identity thieves. With your Social Security number, a thief can compromise your bank account and open new lines of credit. 4. Be crafty with your password. Refunds from electronically filed tax returns are typically direct-deposited into financial accounts, which can help protect a refund check from being stolen from your mailbox. However, if you e-file, you need to know how to do so safely. One way to protect yourself is by creating a strong user password on the website through which you file your tax return. To ensure Internet security, incorporate a series of numbers, letters and punctuation marks into your password. 5. Know your tax preparer. Fraud rings have been known to front as tax preparation centers. Scam artists prey on the unsuspecting customers of these centers, stealing personal information and sometimes redirecting their tax refunds. According to Forbes, there have also been instances when a corrupt tax preparer has sold a client's information to a criminal, who then used the information to file for a fraudulent tax return. The bottom line? It's a good idea to research your tax preparer or accountant and make sure he or she is legitimate and ethical. In addition to taking steps to thwart tax-time identity thieves, you may also want to consider purchasing identity theft restoration coverage, which can alert you to potential fraud and help you repair any damage to your identity in case you do become a victim.