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Money December 2014

Dollar Sense

Tax Time is Rolling Up Fast Too Fast. Here are Some Points You Should Know to Minimize Your Taxes, Preserve Your Money, and Avoid Tax-Related Scams

By Teresa Ambord

The IRS will not try to contact you by email or social media to request personal or financial information, so if you get a call claiming to be from the IRS, you're probably being scammed. Even if your caller ID says "IRS," remember, it's easy to create a bogus caller ID. Thieves use this tool all the time to lure people into becoming victims.


If you are still contributing to a tax-advantaged retirement plan, don't forget you have until April 15th to add to your account for 2014. The maximum you can put into your 401(k) for 2014 is $17,500, or if you turned at least 50 by the end of the year, $23,000. (For 2015, the limit is raised to $18,000 and $24,000 respectively.) For IRAs, the limit remains at $5,500 or $6,500 if you're at least 50 (for 2014 and 2015). Just be sure if you are making a contribution for 2014 after January 1st, that you specify which year it is for.


Be Kind to Your Tax Preparer

You can endear yourself to your tax preparer and maybe save some money and protect yourself  – by making an appointment early in the tax season. If you walk in with a brown bag full of unsorted receipts, don't be surprised if your tax preparer growls under his breath and looks at you like you smell bad. Tax preparers are people too, and when you dump a mess on him or her, you do smell bad. And chances are you'll pay more. Not out of spite, but because part of the fee you'll pay is for bookkeeping services to sort and add up stacks of receipts. Instead, turn on the TV and watch “The Price is Right” while you organize receipts and documents. If you have a tax preparer you like, be kind. Slip a few homemade cookies in with these organized receipts. You'll save the relationship and maybe reduce your preparation fees.


Cashing in E or EE Savings Bonds: Who Reports the Interest?

Interest income on these savings bonds is the difference between the purchase price of the bond and the cash-in amount. If you have cashed in an E or EE bond in 2014, the interest income needs to be reported on at least one 2014 federal income tax return.

  • If you purchased the bond and your name is the only one listed on the bond, you must report the income on your tax return.
  • Suppose you used your money to purchase the bond and are listed as the primary owner, along with a co-owner who is also listed on the bond. According to, the person who purchased and cashed in the bond still must report the interest income.
  • If you purchased the bond but another person is named as the only (or primary) owner, that person reports the interest income.
  • If two people purchase the bond together, and both are listed as co-owners, each of them must report the interest in proportion to the amount they contributed. So, for example, if you and your sister each paid 50% of the price of the bond, you will each need to report 50% of the interest income.

Suppose you and your spouse live in a community property state and buy a bond together which is considered community property. If you file separate federal income tax returns, each of you must report one-half of the interest income.

Note: if you and someone else are listed as co-owners on a bond, you have equal rights to the bond, and either of you may cash it in without the consent of the other. The person who cashes in the bond will receive the 1099-INT, regardless of who made the purchase.

If you have more questions regarding savings bonds, you can learn more at 


Tax Scams are Heating Up

Thieves have learned that one of the best-paying scams they can pull off it to file fake tax returns and collect hefty refunds. That means stealing the personal information of a real person maybe you – and filing a tax return in that name. You could be victimized and not know it until you file your own return, and get a swift rebuke from the IRS for filing twice.

This happened to my sister a couple of years ago. She had a very healthy refund coming. But someone had beaten her to it, filing a return in her name before she even received her W-2s. The IRS was only mildly sympathetic and not very helpful. According to the tax agency, it takes them an average of 180 days to clear up such a mess, so don't hold your breath. My sister did get her refund that year –  just in time for Christmas.

How can you protect yourself? Other than guarding your identity to the best of your ability, tax professionals advise you to file as early as you can. As in my sister's case, that's no guarantee you'll beat a thief to the filing, but the longer you wait, the bigger the window you give thieves to rip you off.

Also, beware of phone calls or emails claiming to be from the IRS. The IRS repeats this warning every year, yet people still fall for the tricks. The warning: the IRS will not try to contact you by email or social media to request personal or financial information, so if you get a call claiming to be from the IRS, you're probably being scammed. Even if your caller ID says "IRS," remember, it's easy to create a bogus caller ID. Thieves use this tool all the time to lure people into becoming victims.

You might get a call from someone claiming to be an IRS agent, who informs you that you are in hot water with the tax agency and owe a lot of money. Conversely, the agent may say you are due a fat refund, and they are calling to help you file and get your check fast. Either way, don't fall for it. Just hang up.

The IRS warns that scammers are now going a step farther. In November 2014 they issued a warning about thieves pretending to be IRS agents, calling to tell you that someone has hijacked your tax refund. They may tell you, with great sympathy, that a thief has electronically filed a tax return in your name. You must, therefore, remedy the situation by filing a legitimate return by mail. And lucky you! This agent is calling to help you! Of course, helping you means they will need you to reveal personal information which they will use to steal from you. They might even demand that you pay taxes due over the phone. A common trick is to tell the victim he or she must go obtain a prepaid debit card for the amount due, and wait for a return call.

Again, the IRS wants to assure you, if there is a problem, the first contact they make with you will likely be by mail. If you have reason to believe the IRS might actually be trying to contact you, pull out your phone book and look up the number yourself, and call the tax agency to inquire. Don't rely on a phone number given to you by the caller.

The IRS advises that "If you believe someone may have used your SSN fraudulently to file taxes, please notify the IRS immediately. You will need to fill out the IRS Identity Theft Affidavit, Form 14039. If you have previously been in contact with the IRS about an identity theft problem, and it has not yet been resolved, call the IRS Identity Protection Specialized Unit, toll-free, at 1-800-908-4490.


Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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