Monday, 17 September 2012

Protect yourself from 10 costly financial calamities

The IRS audits you

Before it happens. Keep tax returns and supporting documents for at least seven years, in some cases even longer. For guidance, go to and search for IRS Publication 552, “Record-Keeping for Individuals.” Keeping a calendar of tax-deductible expenses, such as mileage for business or charitable trips, can help later. For charitable contributions, keep dated receipts for cash gifts of $250 or more and for noncash items you donate, such as furniture and clothes. Donations worth more than $5,000 require a written appraisal.

When filling out your return, make notes of anything you’ll need to remember later. It’s a good idea to prepare digital copies of everything for storing on a computer and backing up outside your home.

If it happens. Don’t panic. Read the audit notice carefully. If it’s something simple, such as a request for additional information, try working directly with the IRS. If it’s more complex and you have a tax preparer, ask him or her for guidance. If the IRS requests a meeting, your situation might be more serious. If you have a tax preparer, let him or her arrange the time and place of the meeting.

Your car breaks down

Before it happens. Don’t wait until you’re sitting on the side of a road on a rainy night to figure out what to do. If your car is under warranty and the manufacturer provides roadside assistance, make sure the number is in your glove box and cell phone. The same goes for insurance companies’ roadside assistance. Another alternative is to subscribe to roadside assistance from AAA or another organization.

It’s a good idea to know how to change a flat tire if you’re physically able to do it. Roadside assistance might be unavailable where your car broke down or you may have to wait hours.

Assemble and keep a roadside emergency kit that includes a jumper cable or battery booster, flashlight, and cell phone if you don’t routinely carry one. For a complete list, search our website for “Emergency roadside kit: What to carry with you.”

If it happens. Try to get the car off the road and away from traffic, especially if you’ll be trying to change a tire or otherwise work on the vehicle. Then simply follow your preparations.

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