Janell A. Israel & Associates

1585 Kapiolani Blvd., Suite 1604, Honolulu, Hawaii 96814 Phone: 808-942-8817

May 2016 Tax Newsletter

What's New in Taxes:

Tax Season Facts and Figures

Each year the IRS compiles information about tax collection and other activities into a "Data Book." This year, the Data Book for the fiscal year ended September 30, 2015, is online as well as available in printed form. So what's the scoop? During the period from October 1, 2014, through September 30, 2015, 86,000 IRS employees collected over $3.3 trillion in tax revenue, processed over 244 million tax returns, and issued more than $400 billion in tax refunds.

How does that compare to the 2015 tax season? According to the Deputy Treasury Inspector General for Tax Administration, the IRS expects to receive more than 150 million individual income tax returns this year. Of those, approximately 19 million will be paper filed and 131 million will be filed electronically. As of March 4, 2016, the IRS had received more than 66.7 million tax returns, and issued more than 53.5 million refunds totaling more than $160 billion.

Where's Your Tax Refund?

Your tax return is filed, and your direct deposit refund is...not the amount you were expecting, or not in your bank account at all. What should you do?

* If your refund is less than you anticipated, part of your refund may have been applied to other debt such as student loans or state income taxes. You'll get a notice in the mail from the IRS explaining the difference and providing the contact information for the agency to which the money was sent.

Other reasons for a smaller than expected refund include math errors, misapplied estimated tax payments, and corrections to tax credits.

* If your refund is more than the amount on your tax return, wait before spending your unexpected windfall. The extra money could be due to an error caught by the IRS, which means you'll get a notice. If the adjustment is correct, the cash is yours to keep.

If the adjustment is wrong, the overpayment could be the result of a mistake on someone else's tax return, such as an incorrect bank routing or account number. In that case, you'll need to contact your bank and the IRS to return the money to the rightful owner.

* If your refund is delayed or missing, verify the direct deposit information on your return for errors. Generally, when your bank is unable to match the account number, the refund is rejected, and the IRS issues a paper check.

What if your direct deposit went into someone else's bank account? Notify your bank immediately. You'll have to work with your financial institution - not the IRS - to trace the funds and get your money.

What's New in Finances:

Who Taught You about Finances?

From whom did you learn financial literacy? From your parents? Your schoolteachers? Are you self-taught? A poll by a national market research company revealed that 35% of the 2007 Americans asked said no one taught them about finances. Of those who received instruction, 19% of the survey respondents said parents taught them, 13% said they learned in school, and 39% reported being self-taught. (Note that those surveyed could choose more than one answer.)

The poll also showed that generational differences exist, with more younger Americans reporting they received financial instruction from parents or school.

If you're not comfortable with your understanding of finances, contact us. We can offer advice and suggestions to increase your money-management confidence and skills.

Here's How to Ruin Your Credit Score

Are you familiar with the expression, "It takes 20 years to build a reputation and five minutes to ruin it"? Investor Warren Buffet's maxim also applies to good credit. Stellar credit scores don't happen overnight or by accident. Instead, you have to exercise financial discipline, sometimes for years. The reward: lenders who are willing to offer mortgages and car loans at favorable interest rates.

Unfortunately, like a good reputation, a strong credit score can easily be ruined. Here are three simple ways to devastate your credit score.

* Max out your credit cards and continually fail to make required payments. Your credit score is a number, generally between 300 and 850 (worst to best), that lenders use when deciding whether to extend credit. About 35% of your credit score is based on your payment history. Paying late or paying less than required minimums can wreak havoc on your score and may signal to lenders that you're overextended.

* Cosign a loan for an irresponsible friend. There's a reason your pal needs a cosigner – and it isn't due to being a good credit risk. When you cosign for a loan, the status of the loan will appear on your credit report. Adding insult to injury, if your friend defaults, you're responsible for the unpaid balance.

* Close or open credit card accounts in quick succession. Either move can adversely affect the ratio of how much you owe in relation to your credit limits. As this ratio climbs, your credit score will tend to sink. Say, for example, you have three credit cards and each has a $1,000 limit. You carry a balance of $500 on one of those accounts. That's a credit utilization ratio of $500 to $3,000 or about 17%. If you close one of the accounts, the ratio will jump to 25% ($500/$2,000). Though you haven't accumulated more debt, your credit score may be hurt.

Be careful with your credit. Negative events can impact your rating for a long time, making lenders reluctant to offer you money.

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All information is believed to be from reliable sources, however we make no representation as to its completeness or accuracy. The information contained in this newsletter is provided by Mostad & Christensen, Inc. The information is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in this newsletter, or for assistance with any of your tax, business or financial strategy concerns, contact our office.

Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Mosted &Christensen, Janell Israel& Associates and NPC are separate and unrelated companies. NPC does not provide tax or legal advice.

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