How Can I Protect Myself from Digital Deception?

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Imagine that you receive an email with an urgent message asking you to verify your banking information by clicking on a link. Or maybe you get an enticing text message claiming that you’ve won a free vacation to the destination of your choice — all you have to do is click on the link you were sent. In both scenarios, clicking on the link causes you to play right into the hands of a cybercriminal seeking your sensitive information. Just like that, you’re at risk for identity theft because you were tricked by a social engineering scam.

Social engineering attacks are a form of digital deception in which cybercriminals psychologically manipulate victims into divulging sensitive information. Cybercriminals “engineer” believable scenarios designed to evoke an emotional response (curiosity, fear, empathy, or excitement) from their targets. As a result, people often react without thinking first due to curiosity or concern over the message that was sent. Since social engineering attacks appear in many forms and appeal to a variety of emotions, they can be especially difficult to identify.

Take steps to protect yourself from a social engineering scam. If you receive a message conveying a sense of urgency, slow down and read it carefully before reacting. Don’t click on suspicious or unfamiliar links in emails, text messages, and instant messaging services. Hover your cursor over a link before clicking on it to see if it will bring you to a real URL. Don’t forget to check the spelling of URLs — any mistakes indicate a scam website. Also be sure to look for the secure lock symbol and the letters https: in the address bar of your Internet browser. These are signs that you’re navigating to a legitimate website.

Deducting 2017 Property Losses from Your Taxes

Hurricanes, wildfires, tornadoes, floods, earthquakes, winter storms, and other events often cause widespread damage to homes and other types of property. If you’ve suffered property loss as the result of a natural or man-made disaster in 2017, you may be able to claim a casualty loss deduction on your federal income tax return.

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What is a casualty loss?

A casualty is the destruction, damage, or loss of property caused by an unusual, sudden, or unexpected event. Casualty losses may result from natural disasters or from other events such as fires, accidents, thefts, or vandalism. You probably don’t have a deductible casualty loss, however, if your property is damaged as the result of gradual deterioration (e.g., a long-term termite infestation).

How do you calculate the amount of your loss?

To calculate a casualty loss on personal-use property, like your home, that’s been damaged or destroyed, you first need two important pieces of data:

  • The decrease in the fair market value (FMV) of the property; that’s the difference between the FMV of the property immediately before and after the casualty
  • Your adjusted basis in the property before the casualty; your adjusted basis is usually your cost if you bought the property (different rules apply if you inherited the property or received it as a gift), increased for things like permanent improvements and decreased for items such as depreciation

Starting with the lower of the two amounts above, subtract any insurance or other reimbursement that you have received or that you expect to receive. The result is generally the amount of your loss. If you receive insurance payments or other reimbursement that is more than your adjusted basis in the destroyed or damaged property, you may actually have a gain. There are special rules for reporting such gain, postponing the gain, excluding gain on a main home, and purchasing replacement property.

After you determine your casualty loss on personal-use property, you have to reduce the loss by $100. The $100 reduction applies per casualty, not per individual item of property. Two or more events that are closely related may be considered a single casualty. For example, wind and flood damage from the same storm would typically be considered a single casualty event, subject to only one $100 reduction. If both your home and automobile were damaged by the storm, the damage is also considered part of a single casualty event — you do not have to subtract $100 for each piece of property.

You must also reduce the total of all your casualty and theft losses on personal property by 10% of your adjusted gross income (AGI) after each loss is reduced by the $100 rule, above.

Keep in mind that special rules apply for those affected by Hurricanes Harvey, Irma, and Maria. The Disaster Tax Relief Act of 2017 increased the threshold for claiming a casualty loss deduction to $500, waived the requirement that the loss is deductible only to the extent it exceeds 10% of AGI, and allowed a deduction even for those who do not itemize.

Also note that the rules for calculating loss can be different for business property or property that’s used to produce income, such as rental property.

When can you deduct a casualty loss?

Generally, you report and deduct the loss in the year in which the casualty occurred. Special rules, however, apply for casualty losses resulting from an event that’s declared a federal disaster area by the president.

If you have a casualty loss from a federally declared disaster area, you can choose to report and deduct the loss in the tax year in which the loss occurred, or in the tax year immediately preceding the tax year in which the disaster happened. If you elect to report in the preceding year, the loss is treated as if it occurred in the preceding tax year. Reporting the loss in the preceding year may reduce the tax for that year, producing a refund. You generally have to make a decision to report the loss in the preceding year by the federal income tax return due date (without any extension) for the year in which the disaster actually occurred.

Casualty losses are reported on IRS Form 4684, Casualties and Thefts. Any losses relating to personal-use property are carried over to Form 1040, Schedule A, Itemized Deductions.

Where can you get more information?

The rules relating to casualty losses can be complicated. Additional information can be found in the instructions to Form 4684 and in IRS Publication 547, Casualties, Disasters, and Thefts. If you have suffered a casualty loss, though, you should consider discussing your individual circumstances with a tax professional.

 

New rules for 2018 and beyond

Recent tax reform legislation eliminates deductions for casualty losses that occur in 2018 through 2025, except for losses in federally declared disaster areas.

The legislation also makes changes that apply retroactively to 2016 and 2017 for net disaster losses arising from 2016 federally declared disaster areas.

Socially Responsible Investing: Investing That Makes A Difference

Socially responsible investing (SRI) has come to represent various investment strategies that favor companies with business practices generally viewed as socially responsible, ethical, and/or sustainable.

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Overall, investor interest in Socially Responsible Investing has been gaining momentum. In fact, the number of investment funds incorporating ESG (environmental, social, and governance) factors has increased 12% in the last two years alone, from 894 in 2014 to 1,002 in 2016. According to the Forum of Sustainable and Responsible Investing, these 1,002 funds represent $2.6 trillion in net assets.

What is Socially Responsible Investing?

Fundamentally, SRI is an investment strategy in which companies’ social and environmental records and objectives are factored in when building a portfolio.

Money managers who use SRI strategies often integrate ESG factors with traditional financial analysis to choose securities for their funds. The heightened focus on corporate sustainability issues allows investors to compare how businesses in the same industry have adapted to meet social and environmental challenges, and provides some insight into which companies may be exposed to risks or have a competitive advantage. For example, in some instances, poor decisions and lack of planning could cause negative financial results for a company, whereas good corporate citizenship may boost a company’s public image and help create value.

Why is Socially Responsible Investing attractive to investors?

Individual investors may have different opinions about which policies and practices have a positive or negative impact on society. Fortunately, there are a number of SRI options to choose from. This gives investors the ability to build a portfolio that aligns with their personal values and offers the potential for earning positive returns.

In addition, investors may have difficulty measuring the intangible value associated with socially responsible companies, which means these companies may be undervalued and represent a potential buying opportunity.

What might investors find unappealing?

SRI opponents claim that investing should be about making money first; therefore, social and environmental issues are viewed as noble impediments to that goal. Focusing on SRI strategies limits the total universe of available investments and could make it more challenging to diversify and maintain your desired asset allocation. Diversification and asset allocation are methods used to help manage investment risk; they do not guarantee a profit or protect against investment loss.

Moreover, although data is available, it can be difficult to thoroughly assess the ethics of a given company. For example, beyond the value chains of a company itself, investors might also need to look at the different social standards among the contractors and subcontractors associated with the company.

Remember that different SRI funds may focus on very different ESG criteria, and there is no guarantee that an SRI fund will achieve its objectives.

All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful. The return and principal value of SRI stocks and mutual funds fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost.

Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

 

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