Beware Back-to-School Tuition Scams

Back-to-school season means a flurry of shopping — and a flurry of scams. Scammers know that students and their parents are caught up in a frenzy of preparations and errands and are, therefore, more likely to fall victim to schemes. As you get ready for school, look out for these scams targeting college students and parents of private school students that tend to peak before the start of the school year.

The tuition fee scam

How it plays out: A college student, or the parent of a private school student, receives a phone call from a caller introducing themself as a secretary or administrator at their school, or their child’s school. The caller claims the student or parent owes tuition fees and will not be allowed to return to school for the coming semester unless the fees are paid. They may explain that a tuition check has bounced or that a credit card payment didn’t clear. Alternatively, the caller claims the student’s grant or scholarship was abruptly canceled and the student is now being billed for the full tuition fee.

The caller insists on being paid the outstanding sum immediately or the student will lose their spot in the school. The “secretary” or “administrator” provides the victim with detailed information for wiring money or dropping off the cash at a private address. Of course, once the money is sent, it will never be seen again.

Protect yourself: This scam is easy to spot because most schools will not insist on immediate payment, or payment through a wire transfer. If you receive a call like the one described above, ask the caller detailed questions about the school, their position and the money owed. If it’s a scam, the caller will not be able to answer well. You can also explain that you need to see the actual bill before making any payments, and that you’d like to pick up the bill yourself from the school. Finally, you can insist on calling the school directly to make the payment.

The student tax scam

How it plays out: In this scam, someone allegedly representing the IRS calls a college student at a public university and claims they neglected to pay their student tax. The caller explains that the student tax helps fund the university and that failure to pay this tax can result in disqualification from class and possible imprisonment. They will insist on immediate payment via prepaid gift card or wire transfer.

Protect yourself: You can spot this scam by remembering that the IRS will always first contact people by mail. Also, the IRS won’t insist on being paid through gift card or wire transfer.

The scholarship scam

How it plays out: A scammer reaches out to a college student telling them they’ve been guaranteed approval for a scholarship or grant. The only catch is that the student must pay a hefty fee to receive it. Unfortunately, the scholarship is bogus and, if the victim falls for the scam, they will never see that money again.

In a similar scam, a victim is instructed to pay a fee to a company that will allegedly file a Free Application for Federal Student Aid (FAFSA) form in their name. Of course, no FAFSA form will be filed, and the money paid for this “service” will go directly into the scammer’s pockets.

Protect yourself: Student scholarships and grants are designed to help students and their parents pay for education; they don’t charge for eligibility. If an alleged scholarship claims to charge a fee before granting approval, it is most certainly a scam. Also, no company will guarantee approval for a scholarship or grant; there is always a vetting process of some kind before eligibility is determined. Finally, there is no reason to pay to have a FAFSA form filed; it can be completed easily online here.  For additional help, college students can contact the financial aid office at their university.


Don’t forget to check the latest scam alerts. Scammers are out in full force before the start of the school year. Don’t let them make the grade! Stay alert and stay safe.

IRS Reveals List of Dirty Dozen Tax Scams for 2020

Each year, the IRS publishes the “Dirty Dozen,” a list of tax scams most prevalent during that year’s tax season. This year, with COVID-19 pushing off the federal tax deadline to July 15, the IRS held off publishing the list until early July, and of course it’s loaded with COVID-19-related scams.

Whether you’ve filed for an extension, you’ve had your taxes filed for months or you’ve gotten them in just in time at the mid-July deadline, be on the lookout for the Dirty Dozen of 2020, which continues spreading for months after Tax Day.

1. Phishing: Fake emails or websites impersonate the IRS in an attempt to steal information about refunds or Economic Impact Payments (EIPs).

Protect yourself: The IRS will never initiate contact with taxpayers via email. Be extra wary of any websites and emails making heavy use of COVID-19 terms like stimulus, coronavirus and Economic Impact Payment.

2. Fake charities: Criminals exploit the fear and uncertainty surrounding the pandemic to set up bogus charities that rob innocent victims who believe they’re helping the unfortunate. The “charity” may even claim to be working on behalf of the IRS to help victims of the virus get their tax refunds.

Protect yourself: Charities with familiar-sounding names that aggressively market themselves are often bogus charities trying to make donors believe they represent the actual well-known organization. They will also refuse to provide an Employer Identification Number (EIN) when asked, and will not have a positive review on sites like Charity.org. Taxpayers can also search for legitimate charities using the IRS charity search tool.

3. Threatening impersonator phone calls: An alleged IRS agent threatens the victim with arrest, deportation or license revocation if taxes are not paid immediately by prepaid gift card or wire transfer.

Protect yourself: The IRS will never threaten a taxpayer or demand immediate payment over the phone. It also will not insist on being paid via gift card or wire transfer.

4. Social media scams: Scammers use information that can be found on social media platforms for a variety of scams, including the impersonation of the victim’s friend to get at the victims’ more private information. This ruse often ends in tax-related identity theft.

Protect yourself: The victim’s “friend” will claim to be in a compromised position and to urgently need the victim’s personal information. When contacted privately, though, the “friend” will have no knowledge of the interaction.

5. EIP or refund theft: Scammers steal taxpayers’ identities, file false tax returns in their names and pocket their refunds and their EIPs.

Protect yourself: Personal information should never be shared online with an unverified contact, even if the contact promises to assist in tax filing or receiving the EIP.

6. Senior fraud: Scammers, or long-term caregivers of the elderly, file tax returns on their behalf and then pocket the refunds and EIPs.

Protect yourself: Seniors should be wary of bogus emails, text messages and fake websites asking them to share their personal information.

7. Scams targeting non-English speakers: Scammers impersonate IRS agents and target non-English speakers, threatening jail time, deportation or revocation of the victim’s driver’s license if an immediate tax payment is not made. The victims have limited access to information and often fall for these scams.

Protect yourself: The IRS will not threaten taxpayers over the phone or insist upon immediate payment.

8. Unscrupulous return preparers: Alleged tax preparers will reach out to the victim and offer their services. Unfortunately, though, they will steal the victim’s personal information, file a tax return on their behalf and pocket the refund, or promise inflated refunds for a bigger fee.

Protect yourself: If a tax preparer is not willing to share their preparer Tax Identification Number (TIN), they are likely to be a scammer. Also, if the alleged preparer promises credits and deductions that sound too good to be true, they probably are.

9. Offer in Compromise scams: Bogus tax debt resolution companies make false claims about settling tax debts for “pennies on the dollar” through an Offer in Compromise (OIC) in exchange for a steep fee.

Protect yourself: An OIC that sounds outrageously attractive is likely bogus. Taxpayers can use the IRS’s OIC tool to see if they qualify for an authentic offer.

10. Fake payments with repayment demands: A scammer steals a taxpayer’s personal information, files a fake tax return on their behalf and has the refund deposited into the taxpayer’s checking account. The scammer then calls the victim impersonating the IRS and claiming the refund was mistakenly inflated, so the victim must return the extra funds via gift card or wire transfer. Of course, this money will go directly into the scammer’s pockets.

Protect yourself: Refund checks will never be deposited in a taxpayer’s account if they have not filed taxes. Also, the IRS does not demand payment by a specific method.

11. Payroll and HR scams: Scams target tax professionals, employers and taxpayers to steal W-2s and other tax information. They will then impersonate the employee and request to change their direct deposit information for their paychecks.

Protect yourself: If an employer or HR representative receives a request for a direct deposit change, it’s best to check with the employee directly to see if the request is legitimate.

12. Ransomware: Malware infects a victim’s computer, network or server, and tracks keystrokes and/or other computer activity. Sensitive data is then encrypted and locked. When the victim tries to access their data, they’ll receive a pop-up message demanding a ransom payment for the return of their information.

Protect yourself: Links embedded in emails from unverified sources should never be opened. Tax software should not be downloaded unless it features multi-factor authentication.


Don’t be a victim of the dirty dozen! Stay alert and stay safe. USAgencies Credit Union will never contact you to ask for any personal or account information, when in doubt, connect with us at (503) 275-0300 or toll-free (800) 452-0915.

The Beginner’s Guide to Filling Out a W-4

Filling out a 4-page W-4 form can be a huge hassle. It’s not a good idea to rush through it, though, because a small mistake now can mean withholding too much or too little of your salary for covering your taxes. There have also been several recent changes to the W-4, so you may need to make some adjustments to your current form on file.

No worries, though, USAgencies Credit Union is here to help! We’ll walk you through a W-4 form and show you how to fill it out in five easy steps. It’s important to note that only Step 1 and Step 5 are mandatory; the rest are optional.

Step 1: Enter your personal information

First, you’ll need to fill out your personal information, including your legal name, residential address and Social Security number. You’ll also be asked to indicate whether you are filing taxes as a single individual, a married partner filing jointly or as the head of a household. According to the IRS, “Head of household” should only be checked if the filer is not married and pays more than half the costs of keeping up a home for themselves and another qualifying individual.

If you believe you are exempt from filing taxes, you may need to complete Step 1(a), Step 1(b), and Step 5 (you’ll also write “Exempt” in Step 4(c), as indicated below.) Before doing this, though, make sure you are truly exempt, which means you have no tax liability and did not need to file a tax return last year. Mistakenly filing as exempt can land you a giant bill come tax time, complete with penalties for late payments.

If you are a single tax filer or married to a nonworking spouse, have no dependents, only have one job and aren’t claiming deductions or credits beyond the standard deduction, you can skip the next three steps. Just sign and date your form now.

Step 2: Multiple jobs or spouse works

You only need to complete Step 2 if you hold more than one job, or you are married and filing jointly with an income-earning spouse. Be sure to read the instructions carefully. You’ll have three options in Step 2:

  • Use the IRS’s online Tax Withholding Estimator to determine how much to withhold below in Step 4(c).
  • Fill out the Multiple Jobs Worksheet, provided on page three of Form W-4, and enter the result in Step 4(c), as explained below. The IRS recommends only filling out the worksheet on one W-4 form per household, entering only the result of the highest-paying job.
  • You can check off this box on the W-4 form if there are only two jobs in total and both jobs have similar pay.

Step 3: Claim dependents (if applicable)

If you have multiple jobs, or if you are married filing jointly and you and your spouse each have a job, you’ll also complete Step 3 on the W-4 form for the highest-paying job.

Step 3 involves some math: If your income is $200,000 or less, or $400,000 or less if you are married and filing jointly, multiply each qualifying child under age 17 by $2,000 and each additional dependent by $500. Add up these numbers and list the total as indicated by Step 3 on the W-4.

Step 4: Make other adjustments (optional)

Step 4 is optional, but you may want to fill it out if you have multiple jobs, or you are married filing jointly and you and your spouse each have a job. If this applies to you, fill out lines 4(a) and 4(b), but only for one of these jobs. Here, too, the IRS recommends filling out these lines on the W-4 form associated with the highest-paying job. These lines can be left blank on your other W-4 forms.

For line 4(a), you’ll tally up all other taxable income not earned from jobs, including interest, dividends and retirement income. This will enable you to deduct the necessary tax out of your paycheck now so you don’t have to pay it later.

For line 4(b), you’ll need to turn to Page 3 on your form and fill out Step 4(b) — Deductions Worksheet. This worksheet will help you determine whether you’re better off taking the standard deduction or itemizing your deductions. You’ll also be able to tally up any other applicable tax deductions, such as student loan interest or deductible IRA contributions.

Once you’ve filled out lines 4(a) and 4(b), you’re ready to fill out line 4(c), which indicates the amount of additional tax you’d like withheld each pay period, such as taxes for a side job you hold as an independent contractor or gig worker. You may have already calculated this number when you completed Step 2 above. If you are exempt from filing taxes, write “exempt” here, as mentioned above.

Step 5: Sign here

Don’t forget to sign and date the W-4 before turning it in to your employer. If you’ve filled it out carefully, you should have just the right amount of money withheld from your paycheck so that you won’t have a huge tax bill to pay in April, and you won’t have a large refund either.

If your life circumstances change and you need to change something on your W-4, you can always make an adjustment. If you get married, have a baby or take on a second job, you’ll need to adjust your W-4 accordingly.

W-4, done!

How to Read a Paystub

Does your paystub puzzle you? Do the myriad boxes with taxes, deductions and credits make you a little dizzy? USAgencies Credit Union is here to demystify things!

Q: My accountant suggests I review my paystub to see if any changes need to be made to the amounts withheld, but I’m finding that to be an impossible task. I always receive my paycheck via direct deposit and I can’t make heads or tails out of the numbers or information on my paystub. Where do I begin?

A: Having your paycheck directly deposited into your checking account can be super-convenient, but it can also lead to being unfamiliar with your paystub. It’s important to review your paystub occasionally to check for possible errors and to review the deductions, as your accountant suggests. No worries, though, USAgencies Credit Union is here to help! We’ll walk you through a typical paystub and break down all the numbers and information so, going forward, you can do it on your own.

Navigating your paystub

Before reviewing the actual numbers, let’s take a moment to explore the way a paystub is structured.

A typical paystub will have your employer’s information in the upper left-hand corner, followed by the pay period for that paycheck. The upper right-hand corner will be stamped with the date the payment was issued.

Moving downward on the left-hand side, a section titled “Gross Pay,” will list the employee’s gross salary per pay period, along with any additional payments, such as overtime pay and benefits. Running parallel to these numbers will be two columns, one labeled “Current,” and the other labeled “YTD,” or year-to-date.

The right side of the paystub will be designated for tax information and deductions. Each of the items listed here will have separate numbers for current amounts and YTD.

Finally, the paystub will summarize all the information and provide a total for net pay.

Now let’s talk about what each of these items means.

Gross pay

Gross pay refers to the total sum of money earned in a pay period before taxes or deductions are withheld. This number represents the employee’s taxable income for the pay period.

The columns labeled “Current” and “YTD” help the employee track how much they’ve earned and paid in taxes and deductions for the pay period, and for the entire year through the respective pay period.

The “Gross Pay” section often includes the employee’s rate per hour and the number of hours worked in the pay period. When multiplied, these two amounts should be equal to the total gross pay.

There may also be various other payments listed here, such as overtime pay, bonuses and commissions.

Taxes

In this section, the paystub lists the various taxes the employee and employer pay each pay period.

Here are the most common taxes listed on paystubs:

    • Federal income tax. Uncle Sam takes a bite out of every employee’s paycheck. The employer will use several pieces of information to determine an employee’s annual tax liability, including the employee’s marital status, income level and the amounts of allowances listed in their W-4. The estimated tax liability will be divided by the number of pay periods in a year to reach the amount that appears on the paystub. The employer will send this tax directly to the federal government.At the end of the year, the difference between the employee’s actual tax liability and the amount withheld will either be refunded to the employee or collected from them, as necessary. Employees can choose to have more or less money deducted from each paycheck by adjusting the number of allowances listed in their W-4s.
    • State taxes. Some states collect state income tax for each pay period.
  • Federal Insurance Contributions Act (FICA). This refers to the law that requires every employee to contribute to the Social Security and Medicare programs with each paycheck. These contributions sometimes appear separately.By law, every employee must pay 6.2% of their gross income to the Social Security fund. Employers must contribute an additional 6.2% for each employee. Self-employed workers must pay both the worker and employer portions of this tax, effectively doubling their Social Security tax liability.Medicare tax liability is calculated as 1.45% of a worker’s gross income. Employers must pay an additional 1.45% for each employee they hire. Here, too, the self-employed must cover both contributions and pay 2.9% of their earnings to Medicare.Most paystubs will separate the employer’s tax liability for these programs and the employee’s tax burden.

Deductions

Besides for these mandated taxes, many workers will find additional deductions on their pay stubs. These include deductions for insurance coverage; deductions for a health savings account, which allows employees to set aside pre-tax dollars to be used for medical expenses; childcare deductions; and deductions for retirement savings plans, including contributions to a 401K or IRA account.

Some paystubs will include a sub-section for employer contributions. This refers to any employer-sponsored contributions for retirement, healthcare costs and other benefits.

In summary

The final section of a paystub will summarize all the information listed above it and highlight the employee’s net pay, or the amount of money the employee will actually see on their paycheck. This section will also list any reimbursements, or money the business owes the employee for using their own funds for business-related expenses. In addition, the summary will include gross earnings, deductions and contributions and finally, the actual check amount.

Now that you know what each item on your paystub means, you can easily review it and check it for errors. You work hard for your money — don’t lose out from a careless mistake.

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