Watch out for bogus e-mails

The e-mail from your bank gets your attention right away. It says you need to log into your account in the next 48 hours to continue your online privileges. Something about a system upgrade. You wonder, is it legitimate? How can you know for sure?

Bogus e-mails designed to steal your identity, also known as phishing, are becoming a bigger problem these days. While they can take many different forms, most scams are designed to trick you into revealing personal information such as your social security number or online account password. Through clever use of logos and familiar-looking web addresses, these e-mails often appear to be an urgent message from your bank, mortgage lender, or e-mail provider.

You may not realize it, but thieves are especially eager to gain access to your web e-mail account. Why? Once a scammer has access to your e-mails, he or she can often figure out where you bank and detect clues to passwords you might use.

So what can you do to protect yourself? Take a moment and think before you click. Never respond to an e-mail asking for your social security number or birth date. You can almost bet that it is a scam. If an e-mail contains a website link that you are not familiar with, do not click on it. Instead, either go directly to the company’s trusted website, or contact them by phone.

Also remember that e-mail scams become more prevalent following a significant public event, such as a natural disaster or sudden stock market drop. Thieves will prey on your sympathies or fears during these times, so be extra careful when responding to appeals for charity or notices to update your financial records. Also, be leery of e-mails with demanding language or incorrect grammar -- both are potential signs of a counterfeit e-mail.

For preventive measures, try to use a different password for every online account, and change your passwords regularly. Make your passwords stronger by using combinations of letters, symbols, and numbers. Also, keep your computer anti-virus software up to date.

Finally, do your part to thwart these crimes by reporting any suspected scam e-mails to reportphishing@antiphishing.org. If you receive a bogus tax-related e-mail, forward it to the IRS at phishing@irs.gov. And of course, feel free to contact our firm if you need a second set of eyes on any suspicious-looking e-mail.

Don't let the tax tail wag the economic dog

Some tax-cutting strategies make good financial sense. Other tax strategies are simply bad ideas, often because tax considerations are allowed to override basic economics.

Here’s one example of the tax tail wagging the economic dog. Let’s say that you run an unincorporated consulting business. You want some additional tax write-offs, so you decide to buy $10,000 of office furniture that you don’t really need. If you’re in the 28% tax bracket and you deduct the entire cost, this purchase will trim your tax bill by $2,800 (28% of $10,000). But even after the tax break, you’ll still be out of pocket $7,200 ($10,000 minus $2,800) -- and stuck with furniture that you don’t really need.

There are other situations in which people often focus on tax considerations and ignore the bigger financial picture. For example:

* Someone increases the size of a home mortgage, solely to get a larger tax deduction for mortgage interest.

* A homeowner hesitates to pay off a mortgage, just to keep the interest deduction.

* Someone turns down extra income, because it might “push them into a higher tax bracket.”

* An investor holds an appreciated asset indefinitely, solely to avoid paying the capital gains tax.

Tax-cutting strategies are usually part of a bigger financial picture. If you are planning any tax-related moves, we can help make sure that everything stays in focus.

Two important deadlines in June

Don't overlook the following two deadlines this month

if they apply to you:

* The second quarterly payment of estimated income tax

  for 2012 is due on June 15.

* TD Form 90-22-1 (Report of Foreign Bank and Financial

  Accounts) must be filed by June 30. This report, also

  known as "FBAR," is required if you have an interest

  in foreign bank, savings, or investment accounts and

  the aggregate value of those accounts exceeded $10,000

  at any time last year. This is not a form that you

  file with your income tax return. Rather, it is a

  separate form filed with the Treasury Department in

  Detroit. The report must be received by the Treasury

  Department, not postmarked, by the June 30 due date.

Partners need a written partnership agreement

If you are operating your business as a partnership, you should have a written partnership agreement. This is true for family partnerships as well.

The need for a partnership agreement can be summed up in two words: things change. You and your partner/s may agree about everything now, but disputes could arise later. Or one of you could die unexpectedly, leaving the survivor/s to deal with the deceased partner’s heirs.

The basic provisions of a partnership agreement should include the parties to the agreement, the company name, purpose, location of the business, and the division of management responsibilities. The agreement should also indicate the following:

* Initial capital contributions (or services in lieu of capital).

* How and when additional capital contributions may be required.

* How profits and losses will be shared.

* How much of the profit is to be distributed and how much is to be left in the company for growth.

Beyond the basics, the agreement should anticipate major events and spell out how to deal with them. For example, if one partner dies, what are the rights and obligations of the other partner/s? Under what circumstances can a partner leave, retire, or be expelled? What are the financial arrangements for departing partners? How long must an ex-partner wait before starting a competing business?

A partnership agreement can't address every possible contingency, so consider an arbitration clause to handle disputes that you and your partner/s can't resolve on your own. Without such a clause, you may face a very expensive lawsuit to settle disputes.

You and your business will benefit from a properly written partnership agreement. See your accountant and your attorney for assistance in getting it done right. Give us a call; we are here to help you.