Money talk: bank fees and property taxes

Way back in 2009 I started reading personal finance blogs. I had just gone through a divorce and was anxious about my ability to pay a mortgage and all the bills by myself. It was through the comments of some of those blogs that I first “met” people who I regularly converse with via their blogs and Twitter (like Revanche of A Gai Shan Life and nicoleandmaggie of Grumpy Rumblings.)

I dabbled with writing about my own experiences with money, budgeting, etc, but I never tried to remake this, my personal blog, as a “personal finance” blog. Money — how to manage it, increase my income, and minimize mistakes — has been weighing on my mind a lot lately, though. I’m not sure if I’ll start writing more about money topics yet, but today I want to write about some of the money topics that have been occupying my thoughts.

As noted in my last post, this has been an expensive year for me. I expect some of that money to make its way back to me, but it looks like the bulk of it won’t get into my accounts until January at the earliest. Yesterday I received the additional refund check from the State of California and deposited it in my checking account; dare I hope to receive the federal refund check before end of year? Only time will tell.

Usually I put deposits like this into one of my savings accounts (yes, I have several and I could certainly write about them another time), but I learned the hard way last month that I hadn’t been padding out my checking account enough for unexpected little hits, so I’m trying to rectify that. What happened? Well, due to my habit of keeping a minimum of funds in my checking account and poor planning, I triggered an “excessive transactions fee” in my main savings account. Ugh. That was $10 I really didn’t want to lose.

Here’s how it happened: one of my savings accounts is my “general fund.” I have my paycheck direct deposit go into this account. About once a month I tally up my variable bills — PG&E, and the various cash back credit cards I use — and transfer funds from my “general fund” to my checking account to pay those bills. I also transfer a little bit extra so I can withdraw cash now and then for some things. There is a separate recurring transfer every month from this “general fund” to checking to cover my automated mortgage payment. And I have a recurring transfer from the “general fund” to another savings account that I use to save for annual expenses, like my property taxes and LTC insurance premium. So, if you’re following along, that means that I regularly have at least 3 transfers a month from this “general fund” account.

Occasionally there is an unexpected expense I need to cover, though, like checks I have to write for home repairs. I then have to assess how much extra I have in the checking account and transfer extra funds to cover any checks that haven’t been planned for. I also have this “general fund” account set as the overdraft protection fund for my checking account.

Last month, I had a “perfect storm” of events that tipped me over the withdrawal limit and led to the “excessive transactions fee.” Because my LTC insurance premium (which is set to be withdrawn from my “general fund” account automatically) was due, I had 4 qualifying withdrawals/transfers just to cover my planned bills that month. I also had to transfer some extra money to cover a payment to a tradesman to fix my heater, bringing me up to 5 withdrawals. Then, I ended up writing two more checks to another tradesman when the first one didn’t fix the problem. The padding in my checking account wasn’t enough to cover these additional checks, and I triggered the overdraft process, not just once, but twice by the time I thought to check my account balance. Damn.

Well, next year the LTC insurance payment will be handled a different way, so I won’t repeat that scenario again. And, I’ll put some thought into how to handle my monthly bills in a more efficient manner, too.

I’ll be ending this year with another big payout by pre-paying the second installment of my property taxes. The payment isn’t due until February 1, 2018, but with the new tax law taking effect on January 1, I will no longer be able to deduct the full amount of my property taxes + state income taxes, as they exceed the $10,000 limit. That should give me an even fatter tax refund in 2018, although it doesn’t bode well for tax refunds in 2018 and beyond.

Overall, I’m really glad that my December 29 paycheck is going to be my third paycheck this month, making it an “extra” one that isn’t part of my normal budgeting process. Here’s to hoping 2018 will be a strong financial year for me!

Are there any end of year money moves you’re making? Any other financial things I should consider before 2017 is over?

Tax planning

I’m hoping to get some comments and opinions on this post. I’m trying to decide if I should file my taxes next year using a product like Turbo Tax or continue to use a tax professional. What works for you? Why do you choose to prepare your own taxes? Or, why do you choose to use a professional?

I used to handle my own tax returns until I got married. I can’t recall exactly why my ex-husband and I started to go to a CPA/tax professional during our first year of marriage, but I do recall that my mother-in-law recommended the person to us. Throughout my marriage and even after I was divorced I continued to use his services.

I always thought a tax professional was there to advise and help you figure out the intricacies of the tax code, and since I also liked the guy I didn’t see a reason to stop. Shortly after my divorce I consulted with him about my plan to rent rooms in my house because I wanted to understand the pros and cons from a tax perspective. His advice was encouraging and I was glad I had talked to him first as it guided my approach to tracking expenses related to renting rooms.

My last year in Chicago was the last year he prepared my taxes. Sadly, he died unexpectedly on April 15th of that year. It seemed oddly poignant that his last days were spent working long hours for his clients.

By that time, though, he had started working closely with some other professionals who were able to step in quickly and take over his clients. I met with one of them before I left Chicago so I could explore whether he could continue to help me after my move, and to make sure I was adequately prepared from a tax perspective for the big financial change that would happen when I sold my house and moved over 2,000 miles away. Based on that meeting, I decided to keep working with him.

When I received the tax package from him early this year, I briefly considered doing my own taxes. I had an investment loss in 2015, however, and I wasn’t confident about how to handle it, so I decided it would be best to continue working with him. For the 2016 tax year I’ll be back on familiar ground with mortgage and property tax deductions, as well as following the same steps as in 2015 for the investment loss.

From a preparation perspective, I doubt there would be much difference between working with a CPA/tax professional and preparing the tax forms myself. I’m responsible for providing the data and for keeping receipts and documentation. Filling out the worksheets I’m provided every year and pulling all the data together takes me several hours. Inputting it shouldn’t take much longer, so I think with a good tax program I should be able to complete the tax returns myself and not miss any credits or deductions. I’m just not 100% sure.

Last month I decided to take steps to find a local tax professional by setting up an appointment with a person highly recommended on While I liked her and we had a good conversations, she informed me that her minimum fees were twice what I was paying the CPA back in Illinois. She gave me the names of two other local firms I could look into that would likely have lower fees, but when I looked them up online and saw their range of services I started questioning my need for working with a professional at all.

So, should I go it alone for the 2016 tax year? Or should I continue working with a professional? What do you do and why?


Identity theft and income taxes

I haven’t filed my 2012 income taxes yet, but I had planned to file them electronically like most people do these days. Unfortunately that option is no longer available to me because someone else has already filed a 2012 return using my social security number.

My first clue that something was very, very wrong was when I looked through my mail last Monday night and found an envelope from the U.S. Department of Treasury with a familiar look to it. I’m old enough to remember the days when filing income taxes involved mailing off my taxes and receiving a paper refund check in return. And when I opened the envelope, that’s what I found: a refund check made out to me and a stranger named Janice. (I’m not going to give Janice’s full name here as she may be just as much of a victim as me.)

Refund check

A completely legit (and sizable!) income tax refund check from the U.S. government.

My first call Tuesday morning was to the accountant who is my tax preparer. He confirmed that my 2012 taxes hadn’t yet been filed and told me I would need to call the IRS directly. Calling the IRS around tax time is bound to result in a long hold time, so I was prepared for that. The phone tree I had to navigate was daunting and I accidentally hung up once, but I eventually got a real, live person on the phone. She asked me what tax year I had last filed, what my filing status had been, and whether I claimed any dependents. Then she confirmed the worst: that was definitely a refund check and someone had “used my information” to file a 2012 tax return.

The IRS agent informed me that I will have to file my taxes the old-fashioned way this year: by mail. I must include a copy of a government issued ID and IRS Form 14039, an Identity Theft Affidavit (of course the IRS has a form for that!). My return will be processed manually, and if I’m entitled to a refund it may take up to six months for it to be issued to me by check. As for the check, I was instructed to write VOID on the back of it and to mail it to the processing center in Kansas City.

I asked the agent if she could clarify for me that when she said someone had “used my information” to file a return that meant my social security number had been used. Her answer was yes, which meant that I had to take additional steps to make sure that my SSN isn’t used in even more damaging ways. I was instructed to contact one of the major credit agencies to place a free 90-day fraud alert, and that the agency I contacted would alert the others automatically.

When I got off the phone with the IRS, I recalled that an insurance product I had purchased last year entitled me to identity theft coverage, so I placed a call to that company next. I was given similar information by the agent and also a bit of reassurance. She said that usually these types of thieves don’t tend to use the SSNs to open fraudulent credit accounts. I hope she’s right.

One final step I took was to file a police report. According to the email sent to me by Equifax confirming the 90-day fraud alert, the report issued to me by Chicago Police Department should entitle me to an extended fraud alert, although I do have to mail in a copy of the police report and a form.

I wish I knew how someone got my SSN, but it’s unlikely I’ll ever find that out. While I’m very careful with my personal information and always cross-cut shred anything that could be sensitive, there are still many legitimate reasons that I’ve had to provide my SSN, such as on mortgage applications and school records. Heck, when I was an undergrad we used or SSN as our ID! I had my SSN memorized after just one term since we had to provide it to enroll in classes and whenever we talked with an enrollment counselor or the financial aid office. I have no idea how those records have been maintained over the years; perhaps they were easily compromised.

The IRS and financial institutions are aware of these scams and have been intensifying efforts to undercover this type of fraud. It’s because of the fraud screens the IRS and banks use that I received a paper check. The IRS agent I spoke with told me that the thief would have provided a bank account for an electronic refund, however something didn’t match up quite right and the bank rejected the deposit. This triggers the Treasury to issue a paper check, which then was mailed to the legitimate address used on the tax return.

Thinking about this just as a taxpayer and not as a victim, it still makes me angry. The one link above points to an article on the IRS website that notes the identity theft screens “…helped the IRS in 2012 protect $20 billion of fraudulent refunds, including those related to identity theft, compared with $14 billion in 2011.” People rant about wasting federal dollars, but if this is how much is recovered, I wonder how much is actually not recovered and wasted on fraud like this? Those thieves are stealing our money! Money that could be better spent on social programs for the poor and sick, for example.

Learning that your identity has been stolen is stressful and depressing. I think I’ve done all I can to protect myself from further harm in the short-term, and remain hopeful that this is the worst it gets.