CREDIT & MONEY MANAGEMENT


Head Off ID Theft

My wallet was stolen from my car when I was on an out-of-town trip. I have already canceled my credit cards and debit card, but I'm worried that I might become a victim of identity theft. Is there anything else that I can do to protect myself? -- G.P., Wyandotte, Mich.

Canceling your credit and debit cards was a smart first move, but don't stop there. Report the stolen wallet to the police where the theft occurred. If your driver's license was stolen, contact the department of motor vehicles not only to find out how to replace it but also to alert the authorities that someone might attempt to use your old ID, says Joe Reynolds, product manager for identity-fraud protection services at Travelers Insurance.

Then contact one of the credit bureaus (Experian.com, Equifax.com or TransUnion.com) to file a fraud alert, which will require lenders to attempt to verify your identity before issuing any new credit in your name (the credit bureau will alert the other two). Fraud alerts usually last for 90 days. If you end up becoming a victim of ID theft, you can get extended fraud-alert protection, which can last up to seven years, plus two free credit reports from each of the bureaus within 12 months (in addition to the annual free credit reports everyone can get at www.annualcreditreport.com).

Identity thieves can take a long time to pounce, so review your credit reports periodically for suspicious activity. To be even safer, you may want to initiate a credit freeze on your account, which prohibits new lenders from seeing your credit report unless you give them permission. But credit freezes can be expensive (typically, you pay $10 at each of the three bureaus to initiate the freeze and another $10 apiece to have it lifted). Freezes can also be a nuisance: You have to lift a credit freeze (at $10 a pop) whenever you apply for a new credit card, car loan, insurance or anything else that requires a credit report.

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Finally, check with your insurance company, employer, bank or credit union to see if you have access to an identity-theft protection program or fraud-resolution services. For more information about protecting yourself from ID theft, see the Federal Trade Commission's identity-theft site.

Social Security step-up

My husband and I both receive Social Security. When one of us dies, does the other get any portion of that check, or does it stop completely? -- C.S., via e-mail

It depends on who dies first and the size of his or her benefit. If your husband receives a larger benefit than you do and he dies first, you would step up to his larger benefit, but your own Social Security benefit would disappear. As long as you are at least normal retirement age -- currently 66 -- at the time, you would be entitled to 100% of what he received, even if you collected reduced benefits before your normal retirement age. If you die first, your husband would continue to collect his own benefit, but your smaller benefit would disappear.

Kiddie-tax rules

I want to buy 50 shares of stock for each of my two children through Sharebuilder.com. What are the tax implications of minor children owning stock in a custodial account? -- L.K., Irvine, Cal.

Children under age 19 or full-time students under age 24 (assuming they do not provide more than half of their own support) may be subject to "kiddie tax" rules. The first $950 of a child's investment income in both 2010 and 2011 is tax-free, and the next $950 is taxed at the child's own rate. Any investment income above $1,900 is taxed at the parents' higher rate. However, the higher rate applies only to a child's investment income, not to wages or self-employment income.

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