Protect Your Identity

According to its last Consumer Sentinel report, the Federal Trade Commission received 371,061 identity theft complaints in 2017, down from 399,222 the previous year.  That’s good news, but the 2018 Identity Fraud Study issued by Javelin Strategy & Research tells a darker tale.  Based on random survey of Americans, it revealed that there was an 8 percent increase in identity fraud (the fraudulent use of someone’s personal information) from 2016 to 2017, and losses rose from $16.2 to $16.8 billion.  Javelin also notes that while the chip cards have cut down on fraud terminals or by cloning devices, the drop has been more than offset in online theft and fraud.

For More Information, click here.

Teaching Suggestions

  • Ask students if anyone has his/her identity stolen. If so, what has been their experience?
  • Ask students to prepare and then share a list of steps that they can take to reduce chances of becoming identity theft victims?

Discussion Questions

  1. How can you detect if you are a possible victim of an identity theft?
  2. If you become a victim of identity theft, what steps must you take immediately?

Trump’s Tax Plan and How It Affects You

“On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act.”

Fact:  Most Americans wonder how the current wave of tax reform will affect them.  This article by Kimberly Amadeo summarizes how the Act changes the amount of income tax that both individuals and businesses pay.

Significant changes in the Act for individuals include

  • Lower tax rates (highest rate in 2017 was 39.6 percent drops to 37 percent in 2018) could mean an increase in the amount individuals take home each payday.
  • Personal exemptions ($4,150 in 2017) per person are eliminated.
  • The standard deduction almost doubles for a single person ($6,350 in 2017) to $12,000. For married and joint filers the standard deduction ($12,700 in 2017) is now $24,000.
  • More taxpayers will opt to take the standard deduction instead of itemizing deductions.
  • For those taxpayers who choose to itemize, many itemized deductions that were previously allowed have been eliminated.
  • Taxpayers who itemize can still deduct charitable contributions, most mortgage interest, retirement savings, and student loan interest.
  • Taxpayers who itemize can still deduct up to $10,000 in state and local taxes.

For businesses, the largest and most signification change is lowering the maximum corporate tax rate from 35 percent to 21 percent beginning in 2018.

The article does provides more specific information about how the Tax Cuts and Jobs Act affects both individuals and businesses.

For more information, click here.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss how the Tax Cuts and Jobs Act will affect a single college student or a typical American family.
  • Explore how lower corporate taxes could impact economic growth, worker salaries, unemployment rates, job creation, and other factors that impact both the nation and individuals.

Discussion Questions

  1. Given the information contained in this article and other reports, do you think the Tax Cuts and Jobs Act is good for you? Explain your answer.
  2. For an individual, what effect does lower taxes have on your spending, savings and investments, and retirement planning?

Tax Identity Theft Awareness Week

Are you looking forward to getting your tax refund in the New Year? Tax identity thieves may be looking forward to getting your refund too. That’s why the Federal Trade Commission has designated January 29-February 2, 2018 as Tax Identity Theft Awareness Week.

Tax identity theft happens when someone uses your Social Security number (SSN) to get a tax refund or a job. You might find out it’s happened when you e-file your tax return and discover that a return already has been filed using your SSN. Or, the IRS may send you a letter saying more than one return was filed in your name, or that IRS records show you have wages from an employer you don’t know.

Learn to protect yourself from tax identity theft and IRS imposter scams, and what to do if someone you know becomes a victim. The FTC and partners including the IRS, the Department of Veterans Affairs, and the Treasury Inspector General for Tax Administration will be co-hosting free webinars and Twitter chats during Tax Identity Theft Awareness Week. Visit ftc.gov/taxidtheft for details about the events and how to participate.

For more information, click here.

Teacher Suggestions

  • Ask students if filing early may avoid e-file tax identity theft fraud if someone files before they do.
  • Ask students what steps should they take if their identity is stolen?

Discussion Questions

  1. How can one protect from tax identity theft and IRS imposter scams?
  2. What can you do if you or someone else you know becomes a victim of identity theft?

Protect Your Social Media Accounts

The Internet has made our lives easier in so many ways. However, you need to know how you can protect your privacy and avoid fraud. Remember, not only can people be defrauded when using the Internet for investing; the fraudsters use information online to send bogus materials, solicit or phish.

Here’s what you can do to protect yourself when using social media:

Privacy Settings: Always check the default privacy settings when opening an account on a social media website.

Biographical Information: Consider customizing your privacy settings to minimize the amount of biographical information others can view on the website.

Account Information: Never give account information, Social Security numbers, bank information or other sensitive financial information on a social media website.

Friends/Contacts:  Decide whether it is appropriate to accept a “friend” or other membership request from a financial service provider, such as a financial adviser or broker-dealer.

Site Features: Familiarize yourself with the functionality of the social media website before broadcasting messages on the site. Who will be able to see your messages — only specified recipients, or all users?

For More Information, click here.

Teaching Suggestions

  • Ask students to make a list of their social media accounts. How do they protect their accounts from fraudsters?
  • Why do many social media websites require biographical information to open an account?

Discussion Questions

  1. Why is it important to limit the information made available to other social media users?
  2. Is there an obligation to accept a “friend” request of a service provider or anyone you don’t know or do not know well?
  3. Why be extra careful before clicking on a link sent to you even if by a friend?

IRS: Protect Yourself from Telephone Scammers

Recently, there have been numerous calls from the “IRS” threatening you with lawsuits or jail sentences unless you pay up immediately.  Don’t be a victim.  The IRS doesn’t initiate contact with taxpayers by e-mail, text message or social media channels to request personal or financial information.  This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.

Remember, the IRS will never

  • Call to demand immediate payment, nor will the agency call about taxes owed without first sending you a bill.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for a credit or debit card number over the phone.
  • Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

For more information,click here.

Teaching Suggestions

  • Ask students if they have received a call from the “IRS” impersonators. If so, what was their response?
  • Have students visit irs.gov and click on Tax Scams/Consumer Alerts to learn what the agency is doing to stop these annoying calls.

Discussion Questions

  1. What should do if you get a phone call from someone claiming to be from the IRS and you know you don’t owe any taxes?
  2. Who should you contact to report such calls from the imposters?

Beware of IRS Imposters

You get a call from a scammer pretending to be with the IRS, threatening you’ll be arrested if you don’t pay taxes you owe right now.  You’re told to wire the money or put it on a prepaid debit card.  The scammer might threaten to deport you or say you’ll lose your driver’s license.  Some scammers even know your Social Security number, and they fake caller ID so you think it really is the IRS calling.  But it’s all a lie.  If you send the money, it’s gone.

The Federal Trade Commission advises that if you get illegal sales calls, robocalls, or fake IRS calls, it’s best to ignore them.  Don’t interact in any way.  Don’t press buttons to be taken off the call list or talk to a live person or call back.  When you have a tax problem, the IRS will first contact you by mail.  The IRS won’t ask you to wire money, pay with a prepaid debit card, or share your credit card information over the phone.  If you get fake calls, file a complaint with the Treasury Inspector General for Tax Administration at tigta.gov. You also can file a complaint with the FTC at ftc.gov/complaint.  If you’re concerned there’s a real tax problem, call the IRS directly at 800-829-1040.

For more information, click here.

Teaching Suggestions

  1. Ask students to make a list of steps that taxpayers can take to protect themselves from tax scammers.
  2. Why do scammers prey on the most vulnerable people, such as the elderly, newly arrived immigrants and those whose first language is not English?

Discussion Questions

  1. What can the IRS and other governmental agencies do to catch and punish criminals impersonating IRS agents?
  2. How can taxpayers protect themselves from scam artists?
  3. What should you do if you believe you owe federal income taxes?

Chip Card Scams

Scammers are taking advantage of millions of consumers who haven’t yet received a chip card.  For example, scammers are e-mailing people, posing as their card issuer.  The scammers claim that in order to issue a new chip card, they need to update your account by confirming some personal information or clicking on a link to continue the process.  Information received can be used to commit identify theft.  If they click on the link, they may unknowingly install malware on your device.

How can you tell if the e-mail is from a scammer?

  • There is no reason your card issuer needs to contact you by e-mail or by phone to confirm personal information before sending you a new chip card number.
  • Still not sure if the e-mail is a scam? Contact your card issuers at phone numbers on your cards.
  • Don’t trust links in e-mails. Only provide personal information through a company’s website if you typed in the web address yourself and you see that the site is secure, like a URL that begins https (the “s” stands for secure).

For more information, click here.

Teaching Suggestions

  • Ask students to visit other identify theft websites, such as, consumer.gov/idtheft, to learn what to do if your identity is stolen.
  • Ask students to compile a list of what actions can they take to ensure that their credit/debit cards and other financial information are secure.

Discussion Questions

  1. How do you discover that someone has stolen your identity?
  2. What steps can you take to thwart identity thieves?

Income Tax Identity Theft Baffles IRS

“Income tax identity theft is a huge problem that is only getting worse.”

According to a 2015 report of the General Accountability Office (GAO), the IRS paid out $5.8 billion in bogus refunds to identity thieves for the 2013 tax year–the latest year that complete data are available.  To make matters worse, the actual dollar amount is probably higher because of the difficulty of knowing the amount of undetected fraud.

To combat the problem, the IRS announced a new cooperative effort between the IRS, state tax administrators, and private tax preparation services to fight income tax identity theft.  A number of specific steps are outlined in this article.  Unfortunately, the experts admit there are additional problems to stopping identity thieves that are not addressed in the new program.  In fact, most experts agree that additional regulations are required to coordinate employer reporting of employee wages with Social Security reporting requirements.

For individual taxpayers, bogus tax returns become a very real and personal problem if their social security number is stolen and their personal tax return is flagged by the IRS as suspicious.  To help resolve disputed tax returns, the office of the National Taxpayer Advocate, which is an internal watchdog for consumers at the IRS, suggests that you file a police report and then mail a paper tax return with an attached Form 14039–Identity Theft Affidavit with a copy of the police report.  In addition to additional documentation, expect that it may take on average 278 days to resolve a claim if you become a victim of income tax identity theft.

For more information, click here.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss the importance of protecting your personal identity and especially your social security number.
  • Stress the importance of monitoring your credit report and all financial documents that could indicate your personal identity has been stolen.

Discussion Questions

  1. What steps can you take to protect your personal identity?
  2. There are a number of credit monitoring services that will help protect your identity. Most charge $75 to $100 or more a year to monitor your financial and personal information.  Do you feel this  service is worth the cost?

Saving Your Tax Refund

The average federal income refund for this year was nearly $2,900, resulting in tens of billions of dollars ready for use. Instead of spending those funds, financial advisors recommend saving for an emergency fund, retirement, or other household goals.  Currently, these refunds represent an amount larger than the average annual personal savings rate of most Americans. Spending the refund on things you don’t need often results in reduced future financial security.

Also, consider reducing your withholding throughout the year.  The refund you receive is only getting back money you lent the government over the past year at zero per cent interest.  Instead, have an automatic withdrawal sent to your savings each month.

For additional information on saving your tax refund, click here.

Teaching Suggestions

  • Have students conduct a survey of people to determine how tax refunds are used..
  • Have students prepare an analysis of lost interest/earnings by taxpayers who received a large refund each year.

Discussion Questions 

  1. What are the benefits of receiving a large tax refund?
  2. What are the drawbacks of receiving a large tax refund?

Tax Scams

Phone calls from criminals impersonating an Internal Revenue Service agent are the most common and serious tax scams reported by the IRS. Taxpayers should be aware the IRS never calls demanding payment or to ask for a credit card; the agency will first make contact by mail.

Phishing involves a taxpayer receiving an unsolicited email trying to obtain financial or personal information.  These phony emails often look very official with an IRS logo.  Tax-related identity theft occurs when a stolen a Social Security number is used to file a tax return for a refund.  Fraudulent tax preparation services prey on innocent taxpayers with promises of large refunds.  Be sure to investigate the credentials of the tax preparer and make sure the preparer will be available after April 15.  Avoid tax preparers who base their fees on a percentage of the refund or promise a large refund.

Other common tax scams include inflated refund claims, fake charities, filing false documents to hide income, abusive tax shelters, falsifying income to claim tax credits, and excessive claims for fuel tax credits.

For additional information on tax scams, click here:

Teaching Suggestions

  • Have students talk with others to obtain information about actions taken to file their taxes.
  • Have students prepare a list of warning signs of tax scams.

Discussion Questions 

  1. What attitudes and behaviors can result in a person being a victim of a tax scam?
  2. What actions can taxpayers take to avoid being a victim of a tax scam?