When’s the delivery date?

• Check. The date you mail it. 
• Credit card. The date you make the charge. 
• Pay-by-phone account. The date the financial institution pays the amount.
• Stock certificate. The date you mail the properly endorsed stock certificate to the charity.

Is the organization “qualified”?

The year is quickly drawing to a close, but there’s still time to take steps to reduce your 2016 tax liability — you just must act by December 31. Here are six actions to consider taking:

1.    Prepay tuition bills for academic periods that will begin in January, February or March of 2017 (if it will make you eligible for a tax credit).

If your 2016 adjusted gross income (AGI) qualifies you for the American Opportunity credit (maximum of $2,500 per eligible student) or the Lifetime Learning credit (maximum of $2,000 per family), consider prepaying tuition bills that aren’t due until early 2017 if it generates a bigger credit on this year’s tax return. You can claim a 2016 credit based on prepaying tuition for academic periods that begin in January through March of 2017. 

Bear in mind that both the American Opportunity credit and the Lifetime Learning credit can be reduced or eliminated if your modified adjusted gross income (MAGI) is too high. For the former, the current MAGI phaseout range for unmarried individuals is $80,000 to $90,000 and the range for married couples filing jointly is $160,000 to $180,000. For the latter, the phaseout range for unmarried individuals is $55,000 to $65,000, and for married couples filing jointly it’s $111,000 to $131,000.

If you’re ineligible for these two higher education tax credits because your MAGI is too high, you might still qualify for a deduction of up to $4,000 of qualified higher education tuition. However, you can’t claim the deduction for the same year you claim an education credit or if anyone else claims an education credit for the same student for the same year.

2.   Donate to your favorite charities.

If reducing your taxable estate is an important estate planning goal for you, making lifetime charitable donations can help achieve that goal and benefit your favorite organizations. In addition, by making donations during your lifetime, rather than at death, you’ll receive income tax deductions.

Consider making charitable gifts of appreciated stock if you plan to make significant charitable donations before year-end.  If the appreciated stock has been held for one year or more, you’ll avoid paying tax on the appreciation but will still be able to deduct the donated property’s full value.  There’s paperwork involved with the donation of appreciated stock, so start now to give yourself and your investment advisor enough time to complete the donation before year-end.

To take a 2016 charitable donation deduction, the gift must be made by December 31. According to the IRS, a donation generally is “made” at the time of its “unconditional delivery.” But what does this mean? Is it the date you, for example, write a check or make an online gift via your credit card? Or is it the date the charity actually receives the funds — or perhaps the date of the charity’s acknowledgment of your gift?

The delivery date depends in part on what you donate and how you donate it. Here are a few examples for common donations:

• Check. The date you mail it. 
• Credit card. The date you make the charge. 
• Pay-by-phone account. The date the financial institution pays the amount.
• Stock certificate. The date you mail the properly endorsed stock certificate to the charity.

3.   Sell investments at a loss to offset capital gains you’ve recognized this year.

Selling investments that are currently worth less than what you paid for them and are held in taxable brokerage accounts may allow you to lower your 2016 tax bill. Why? Because you can offset the resulting capital losses against capital gains from earlier in the year. 

If your losses exceed gains, you’ll have a net capital loss for the year. You can deduct up to $3,000 of net capital loss (or $1,500 if you are married and file separately) on this year’s return against ordinary income from salary, self-employment activities, alimony, interest, and other types of income. Any excess net capital loss is carried forward to future years and puts you in position for tax savings in 2017 and beyond.

However, be aware of the wash-sale rules, which preclude the deductibility of losses in certain situations. If, for example, you sold a security the last week of December for a loss and then bought it back the first week of January next year, you wouldn’t be able to use the loss to offset your 2016 gains.

4.    Avoid a 50% penalty by taking retirement plan RMDs.

After you reach age 70½, you must take annual required minimum distributions (RMDs) from your IRAs (except Roth IRAs) and, generally, from your defined contribution plans (such as 401(k) plans). You also could be required to take RMDs if you inherited a retirement plan (including Roth IRAs). 

If you don’t comply — which usually requires taking the RMD by December 31 — you can owe a penalty equal to 50% of the amount you should have withdrawn but didn’t. 

5.    Make 2016 annual exclusion gifts.

The 2016 gift tax annual exclusion allows you to give up to $14,000 per recipient tax-free — without using up any of your gift and estate or GST tax exemption. A married couple can give $28,000 to each recipient. (The exclusion amount will remain the same for 2017.)

The gifted assets are removed from your taxable estate, which can be especially advantageous if you expect them to appreciate. That’s because the future appreciation can avoid gift and estate taxes. Because the exclusion doesn’t carry over from year to year, you need to use your 2016 exclusion by December 31. 

6.    Incur deductible medical expenses (if your deductible medical expenses for the year already exceed the applicable floor).

Consider bunching nonurgent medical procedures (and any other services and purchases with timing that you can control without negatively affecting your or your family’s health) into one year. 

Medical costs are deductible only to the extent they exceed 10% of AGI for people younger than age 65. However, if you or your spouse will be age 65 or older as of year end, the deduction threshold for this year is only 7.5% of AGI. (In 2017, this threshold will increase to 10% of AGI for people age 65 or older.) These taxpayers may want to bunch medical expenses into 2016 to potentially be able to take advantage of the 7.5% floor.

A few additional miscellaneous steps you can take before December 31 to reduce your 2016 tax bill and tie up loose ends include:

• Make sure your 2016 withholding and estimated tax payments are adequate to protect you from underpayment of estimated tax penalties.
• Determine if your 401(k) contributions are going to reach the maximum level permitted for 2016 and make last-minute adjustments if possible.
• Check your partnership and S-corporation stock basis. If you own an interest in a partnership or S-corporation that is expecting a loss for 2016, check with your tax advisor to make sure that you have enough tax basis to take a deduction for the loss.
• Pay your 2016 property tax bill that’s due in early 2017 if you won’t be subject to alternative minimum tax in 2016.
• Make your January mortgage payment.
• Ask your employer if your bonus can be deferred until January. 

Keep in mind that in certain situations these strategies might not make sense. We’d be pleased to help you determine the right steps to take now to lessen your 2016 tax bite.

The IRS recently issued its 2017 cost-of-living adjustments. Because inflation remains relatively in check, many amounts increase only slightly, and some stay at 2016 levels. As you implement 2016 year-end tax planning strategies, be sure to take these 2017 adjustments into account.

Individual income taxes

Tax-bracket thresholds increase for each filing status but, because they’re based on percentages, they increase more significantly for the higher brackets. For example, the top of the 10% bracket increases by $50 to $100, depending on filing status, but the top of the 35% bracket increases by $1,875 to $3,750, again depending on filing status. 

The personal and dependency exemption remains unchanged at $4,050 for 2017. The exemption is subject to a phaseout, which reduces exemptions by 2% for each $2,500 (or portion thereof) by which a taxpayer’s adjusted gross income (AGI) exceeds the applicable threshold (2% of each $1,250 for separate filers).

For 2017, the phaseout starting points increase by $1,250 to $2,500, to AGI of $261,500 (singles), $287,650 (heads of households), $313,800 (joint filers), and $156,900 (separate filers). The exemption phases out completely at $384,000 (singles), $410,150 (heads of households), $436,300 (joint filers), and $218,150 (separate filers). 

Your AGI also may affect some of your itemized deductions. An AGI-based limit reduces certain otherwise allowable deductions by 3% of the amount by which a taxpayer’s AGI exceeds the applicable threshold (not to exceed 80% of otherwise allowable deductions). The thresholds are the same as for the personal and dependency exemption phaseout.

AMT

The alternative minimum tax (AMT) is a separate tax system that limits some deductions, doesn’t permit others and treats certain income items differently. If your AMT liability is greater than your regular tax liability, you must pay the AMT.

Like the regular tax brackets, the AMT brackets are annually indexed for inflation. For 2017, the threshold for the 28% bracket increased by $1,500 for all filing statuses except married filing separately, which increased by half that amount. 

The AMT exemptions and exemption phaseouts are also indexed. The exemption amounts for 2017 are $54,300 for singles and heads of households and $84,500 for joint filers, increasing by $400 and $700, respectively, over 2016 amounts. The inflation-adjusted phaseout ranges for 2017 are $120,700–$337,900 (singles and heads of households) and $160,900–$498,900 (joint filers). (Amounts for separate filers are half of those for joint filers.)

Education- and child-related breaks

The maximum benefits of various education- and child-related breaks generally remain the same for 2017. But most of these breaks are also limited based on the taxpayer’s modified adjusted gross income (MAGI). Taxpayers whose MAGIs are within the applicable phaseout range are eligible for a partial break — breaks are eliminated for those whose MAGIs exceed the top of the range.

The MAGI phaseout ranges generally remain the same or increase modestly for 2017, depending on the break. For example:

The American Opportunity credit. The MAGI phaseout ranges for this education credit (maximum $2,500 per eligible student) remain the same for 2017: $160,000–$180,000 for joint filers and $80,000–$90,000 for other filers. 

The Lifetime Learning credit. The MAGI phaseout ranges for this education credit (maximum $2,000 per tax return) increase for 2017; they’re $112,000–$132,000 for joint filers and $56,000–$66,000 for other filers — up $2,000 for joint filers and $1,000 for others.

The adoption credit. The MAGI phaseout ranges for this credit also increase for 2017 — by $1,620, to $203,540–$243,540 for joint, head-of-household and single filers. The maximum credit increases by $110, to $13,570 for 2017. 

(Note: Married couples filing separately generally aren’t eligible for these credits.)

These are only some of the education- and child-related breaks that may benefit you. Keep in mind that, if your MAGI is too high for you to qualify for a break for your child’s education, your child might be eligible. 

Retirement plans

Only a few retirement-plan-related limits increase for 2017, and even those increases are only slight. Thus, you have limited, if any, opportunities to increase your retirement savings if you’ve already been contributing the maximum amount allowed:

Your MAGI may reduce or even eliminate your ability to take advantage of IRAs. Fortunately, IRA-related MAGI phaseout range limits all will increase for 2017:

Traditional IRAs. MAGI phaseout ranges apply to the deductibility of contributions if the taxpayer (or his or her spouse) participates in an employer-sponsored retirement plan: 

• For married taxpayers filing jointly, the phaseout range is specific to each spouse based on whether he or she is a participant in an employer-sponsored plan:
  • For a spouse who participates, the 2017 phaseout range limits increase by $1,000, to $99,000–$119,000. 
  • For a spouse who doesn’t participate, the 2017 phaseout range limits increase by $2,000, to $186,000–$196,000. 
• For single and head-of-household taxpayers participating in an employer-sponsored plan, the 2017 phaseout range limits increase by $1,000, to $62,000–$72,000. 

Taxpayers with MAGIs within the applicable range can deduct a partial contribution; those with MAGIs exceeding the applicable range can’t deduct any IRA contribution. 

But a taxpayer whose deduction is reduced or eliminated can make nondeductible traditional IRA contributions. The $5,500 contribution limit (plus $1,000 catch-up if applicable and reduced by any Roth IRA contributions) still applies. Nondeductible traditional IRA contributions may be beneficial if your MAGI is also too high for you to contribute (or fully contribute) to a Roth IRA. 

Roth IRAs. Whether you participate in an employer-sponsored plan doesn’t affect your ability to contribute to a Roth IRA, but MAGI limits may reduce or eliminate your ability to contribute:

• For married taxpayers filing jointly, the 2017 phaseout range limits increase by $2,000, to $186,000–$196,000. 
• For single and head-of-household taxpayers, the 2017 phaseout range limits increase by $1,000, to $118,000–$133,000. 

You can make a partial contribution if your MAGI falls within the applicable range, but no contribution if it exceeds the top of the range.

(Note: Married taxpayers filing separately are subject to much lower phaseout ranges for both traditional and Roth IRAs.)

Gift and estate taxes

The unified gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption are both adjusted annually for inflation. For 2017 the amount is $5.49 million (up from $5.45 million for 2016). 

The annual gift tax exclusion remains at $14,000 for 2017. It’s adjusted only in $1,000 increments, so it typically increases only every few years. It increased to $14,000 in 2013, so it might go up again for 2018.

Impact on your year-end tax planning and retirement planning

The 2017 cost-of-living adjustment amounts are trending higher than 2016 amounts, but only slightly. Regarding retirement-plan-related limits, only a few increased, and they increased minimally. How might these amounts affect your year-end tax planning or retirement planning? Contact us for answers. We’d be pleased to help.

The unexpected election of Donald Trump as President of the United States, along with Republicans retaining control of both chambers of Congress, will likely result in an overhaul of the U.S. tax code. 

Based on Trump’s tax reform plan released earlier this year, tax law changes may include a reduction in tax rates for some individual taxpayers and corporations, the elimination of several tax breaks, a restructuring of U.S. taxes on income from abroad, the elimination of the estate tax, and a partial or full repeal of the Affordable Care Act.

Political capital and control

Even though Trump won the electoral college, he lost the popular vote by a slim margin, thus possibly limiting his political capital. Republicans retain control of the Senate but didn’t reach the 60 members necessary to become filibuster-proof. So their simple majority won’t be enough to pass legislation in the Senate. In the House, Republicans retain control by a margin similar to their current one. 
This outcome likely will result in less opposition from Democrats and a greater opportunity to enact significant tax law changes in the coming year. Yet it also likely will require Republicans to compromise on some issues in order to get their legislation through the Senate. 

Proposed tax changes for individuals and businesses

President-elect Trump’s tax reform plan includes the following changes that would affect individuals:

• Reducing the number of income tax brackets from seven to three, with rates on ordinary income of 12%, 25% and 33%, and adapting the current rates on long-term capital gains and qualified dividends for the new brackets,
• Eliminating the head of household filing status,
• Abolishing the net investment income tax,
•  Eliminating the personal exemption (though expanding child-related breaks),
• More than doubling the standard deduction, to $15,000 for singles and $30,000 for married couples filing jointly,
• Capping itemized deductions at $100,000 for single filers and $200,000 for joint filers,
• Abolishing the alternative minimum tax, and 
• Abolishing the federal gift and estate tax, but disallowing the step-up in basis for estates worth more than $10 million.

Proposed changes that would affect businesses include:

• Reducing the top corporate income tax rate from 35% to 15%,
• Abolishing the corporate alternative minimum tax,
• Allowing owners of flow-through entities to pay tax on business income at the proposed 15% corporate rate rather than their own individual income tax rate, although there seems to be ambiguity on the specifics of how this provision would work,
• Eliminating the Section 199 deduction, also commonly referred to as the manufacturers’ deduction or the domestic production activities deduction, as well as most other business breaks — but, notably, not the research credit,
• Allowing U.S. companies engaged in manufacturing to choose the full expensing of capital investment or the deductibility of interest paid, and 
• Enacting a deemed repatriation of currently deferred foreign profits at a 10% tax rate.

Bear in mind that uncertainty has surrounded the details of President-elect Trump’s tax reform plan. However, during the course of the campaign, some of its provisions have gelled with the House Republicans’ tax plan. 

Planning uncertainties

With President-elect Trump soon to be in the White House and continued Republican control of the Senate and the House, major tax law changes likely are on the horizon. However, at this time it’s difficult to determine which provisions of the ambitious tax reform plan will be signed into law. This uncertainty makes tax planning difficult. We can help develop a plan that can take into account all of the variables. 

One of the most common inquiries clients have for their accountants is “What documents do I need to save, and for how long?” Retaining, organizing, and filing old records can become a burden, both at the business and individual levels. As we all strive to achieve a more "paperless" process, how do we determine what warrants taking up valuable office and storage space and what does not?

Records should be preserved only as long as they serve a useful purpose or until all legal requirements are met. To keep files manageable, it is a good idea to develop a schedule so that at the end of a specified retention period, certain records are destroyed.

At Stockman Kast Ryan + Co., we have developed a Records Retention Schedule we think you will find helpful. Although it doesn't cover every possible record, it does cover the most common ones. As always, please feel free to ask us should you have specific questions or concerns.

Proposed Regulations Just Issued 

What are Discounts Anyway?

What You Should Do

Individual taxpayers who have come close to triggering the alternative minimum tax (AMT) in the past should start planning to minimize 2016 taxes as early as possible. This article will define AMT, how it is calculated, and ways to minimize your AMT liability.

What Is It?

The AMT – a separate tax system that doesn’t allow certain deductions and income exclusions – initially was put in place to prevent wealthy Americans from taking so many tax breaks that they eliminated their tax liability. But even taxpayers who don’t normally consider themselves “upper income” can trigger the AMT. For example, you could be vulnerable if you exercised incentive stock options this year.

AMT calculations can be complicated, but the system basically has two tax rates (26% and 28%) and inflation-adjusted income thresholds for them. An exemption is also available, but it phases out based on income. For 2016, the AMT exemptions are $53,900 for single filers and heads of households and $83,800 for joint filers. The phase-out ranges are $119,700 to $332,100 for single filers and heads of households and $159,700 to $493,300 for joint filers. If AMT income is within the applicable range, a partial exemption is available; if it exceeds the top of the range, no exemption is available.

Which Tax Do You Pay?

To determine whether you owe the AMT, you’ll need to calculate your tax under both the regular and AMT systems. If your AMT liability is greater than your regular income tax liability, you must pay the difference as AMT, in addition to the regular tax. The federal AMT rate is 28%, compared to the top regular income tax rate of 39.6 %.

Under the AMT, you can’t take a personal exemption for yourself and your dependents. And you are not allowed to deduct such items as home equity debt interest not used to improve your home; state and local income and property taxes; and miscellaneous itemized deductions subject to the 2% floor.

Vulnerable Taxpayers

Those with high incomes are more susceptible to the AMT than others, but AMT liability may also be triggered by:

• Large families (meaning you take many exemptions)
• Substantial itemized deductions for state and local taxes, home equity loan interest, medical expenses, or similar expenditures
• Exercising and holding incentive stock options
• Adjustments to passive income or losses
• Interest income from private activity bonds

How Do You Reduce Your AMT Liability?

Fortunately, strategies exist for minimizing your AMT. For example, you might want to delay sales of highly appreciated assets until the next year or use an installment sale to spread the gains over multiple years. You can also try to time the payment of state and local taxes and other miscellaneous itemized deductions for years that you do not expect the AMT to apply. Or you might want to recognize additional income this year to take advantage of the AMT’s lower maximum rate (28% vs. 39.6%).

There is also an AMT credit. If you pay the AMT in one year on deferral items (those that affect more than one tax year, such as depreciation) you might be entitled to a credit for a subsequent year. The credit, however, might provide only partial relief or take years before you can fully use it. Nonetheless, the AMT credit’s refundable feature can reduce the time it takes to recoup AMT payments.

Take Action

Most taxpayers do not even realize that the AMT is looming until it’s too late to do anything to manage it. Failing to pay the AMT can lead to penalties and interest, so it’s best to determine ahead of time whether it will apply. Talk to your tax advisor now while you still have time to strategize for 2016.

Paying the proper amount of tax by the annual federal income tax filing deadline isn’t enough to avoid interest and penalties; you must also meet requirements for paying tax throughout the year through withholding and/or quarterly estimated tax payments. If you have income from sources such as self-employment, interest, dividends, alimony, rent, prizes, awards or the sales of assets, you may have to pay estimated tax.

The rules

Generally, you must pay estimated tax if both of these statements apply:

1. You expect to owe at least $1,000 in tax after subtracting tax withholding and credits, and
2. You expect withholding and credits to be less than the smaller of 90% of your tax for the year or 100% of the tax on your previous year’s return. There are special rules for farmers, fishermen, certain household employers and certain higher-income taxpayers.

If you’re a sole proprietor, partner or S corporation shareholder, you generally have to make estimated tax payments if you expect to owe $1,000 or more in tax when you file your return.

Making the payments

Payments are spaced through the year into four periods or due dates. Generally, the due dates are April 15, June 15, Sept. 15 and Jan. 15, unless the date falls on a weekend or holiday. 

Estimated tax is calculated by factoring in expected gross income, taxable income, taxes, deductions and credits for the year. The easiest way to pay estimated tax is electronically through the Electronic Federal Tax Payment System. You can also pay estimated tax by check or money order using the Estimated Tax Payment Voucher or by credit or debit card.

If you’d like assistance determining whether you need to pay estimated tax or calculating your payments, contact us. 

There are three common penalties assessed against taxpayers: underpayment, late payment, and late filing.  These penalties are fairly easy to avoid if you plan ahead.  Generally, tax returns for individual taxpayers are due April 15th and any unpaid tax is also due.  If you fail to meet this deadline, or you did not pay enough taxes during the year through Federal withholding or estimated tax payments, you may be liable for IRS underpayment of estimated tax, late payment, and/or late filing penalties in addition to any tax you owe. 

Underpayment of Estimated Tax Penalty

Probably the most common type of penalty is the underpayment of estimated tax penalty.  This can affect any taxpayer but most often impacts taxpayers who are not W-2 wage earners.  Since income taxes are not directly withdrawn and remitted to the IRS during the year via payroll, the burden falls on the taxpayer to pay estimated tax payments through the year.  These estimates must be paid in four equal quarterly installments which are due on April 15, June 15, September 15, and January 15.  

The underpayment penalty consists of the interest on the underpaid amount for the number of days the payment is late.  Interest is charged at the Federal rate for underpayments which is currently set at 3% for the first quarter of 2016 and 4% for the second quarter of 2016.  Since estimates are required to be paid each quarter, you may be liable for an underpayment penalty even if all tax has been paid.

This underpayment penalty will generally not apply if the tax due, after subtracting any tax withheld, is less than $1,000 or the taxpayer had no tax liability for the prior year return that covered 12 months.

The IRS has provided a safe harbor to help taxpayers avoid these penalties.  Individuals are subject to an underpayment penalty unless total withholding and estimated tax payments equal the smaller of:

• 90% of the tax shown on the current year tax return or
• 100% of the tax shown on the prior year tax return [110% if the taxpayer’s prior year adjusted gross income exceeded $150,000 ($75,000 for married taxpayers filing separately)].

There are special rules for farmers and fishermen so please contact us if at least two-thirds of your gross income is from farming or fishing.

Late Payment Penalty

If you do not pay the tax you owe by the April 15 filing deadline, you will most likely face a failure-to-pay penalty.  The failure-to-pay penalty is .5% of the unpaid balance and applies for each month or part of a month after the due date.  This penalty starts accruing the day after the filing due date.  The penalty is capped at a maximum of 25% of the unpaid tax due. 

If you timely requested an extension of time to file your individual income tax return and paid at least 90% of the taxes owed with the extension request, you may not face a failure-to-pay penalty.  However, you must pay any remaining tax due by the extended due date (generally October 15).         

Late Filing Penalty

One of the most punitive penalties is for failing to file your tax return on time when you owe tax.  The failure-to-file penalty starts at 5% of your unpaid taxes for each month or part of the month the return is late.  The penalty is capped at 25% of the unpaid balance due.  There will be no penalty imposed if there is no tax due with the tax return filing.  If you file your return more than 60 days after the due date or extended due date, the minimum penalty for late filing is the smaller of $135 or 100% of the unpaid tax.

The silver lining with the late filing penalty is that there is no reason to ever incur a late filing penalty.  As long as you file an extension by the April 15th due date, you automatically get an additional 6 months to file the tax return.  So even if you cannot pay the tax, you should still file a return or an extension.  

If both the 5% failure-to-file penalty and the .5% failure-to-pay penalty apply in any month, the maximum penalty you will pay for the month will be 5%.   
  
Penalties for late payment and late filing will not be imposed if the taxpayer can show that the failure was due to reasonable cause, rather than to willful neglect.  Some of the reasonable cause requests that have been approved in the past include death or serious illness of the taxpayer or an immediate family member, unavoidable absence of the taxpayer on the filing due date, and the destruction of the taxpayer’s residence or business.  

1. Get Educated. Educate yourself about the types of scams, malware, phishing, spyware and other common and emerging threats that exist on the internet and how to avert them.
2. Install Protective Software. Install a firewall and antivirus software, with automatic updates, on all computers and networks (including wireless) to avoid hackers, malware and viruses.
3. Enable two-factor authentication (passwords and PINS) on devices, apps and on-line accounts, including e-mail accounts, whenever possible–one of the strongest cybersecurity measures available. Most on-line banking, finance, e-commerce and social media sites, as well as many e-mail providers, allow two-factor authentication.
4. Use strong passwords with a combination of 10 to 15 upper and lower case letters, numbers and special characters. 
5. Change Passwords Frequently. Passwords should be changed every 90 days and should be different for each account.  
6. Click with caution.  Don’t open emails, download files or click links received from people or organizations that you don’t recognize. Even if the message is from someone you know, be cautious and look for information that indicates that the message is legitimate.
7. Use Alerts. Add alerts to your on-line bank and credit card accounts so that you’ll know about unusual transactions immediately.
8. Be Vigilant. Check your on-line bank and credit card account balances and transactions for fraudulent activity every day.
9. Surf safely.  Use a search engine to navigate to the correct web-address to avoid phony web-sites. 
10. Practice safe shopping.  Before you enter any payment information look for the following items on the web-site:  look in the address bar to see if the site starts with “https://; look for a trustmark to make sure the site is safe; when you’re on a payment page, look for the lock symbol in your browser, indicating that the site uses encryption or scrambling to keep your information safe.