Don't Mess With Taxes

I thought my bank was on the technology cutting edge when earlier this year it did away with ATM envelopes and let me deposit my checks by simply sliding the documents into the machine.

USAA has made that deposit upgrade so passé.

The New York Times reports today that the banking component of USAA, better known for its insurance services for members of the military and their families, is about to allow its customers to deposit checks via iPhone.

With USAA's enhanced iPhone app, expected to be available this week, customers can photograph both sides of a check with the phone’s camera, send that image to USAA and then simply watch the money show up in their accounts.

There won't be any need to endorse the document by hand and then mail it to USAA.

But USAA bank officials do recommend that after making an iPhone deposit, customers void the check and file or destroy it to reduce fraud potential. The video below offers a demonstration (really, it's there after the USAA ad at the beginning).

USAA is easing this new electronic deposit option into place. Initially, the iPhone enhancement will be available only to customers who are eligible for credit and have some type of insurance through USAA. Still, say USAA officials, that will cover about 60 percent of the bank’s customers.

Don't have an iPhone? Be patient. USAA plans to offer the option on more mundane cell phones later this year.

And since imitation is the sincerest form of competition, I'm sure folks at my and every other bank are already madly working on their own version of the iPhone deposit option.

Bank accounts and taxes: My dad was in the Navy so I need to check into the possibility of becoming a USAA customer.

It's not the iPhone app that's got me interested. It's not that the company is based just down the road from me in San Antonio.

It's that USAA is offering a pretty good, relatively speaking, CD interest rate.

We've always kept some of our money in liquid accounts, either CDs or money market funds. That's helped provide us a little comfort when stocks have periodically lost value.

Such financial fluctuations are a frustrating fact of life. But it's been really annoying these last few years as stock market returns and savings instrument interest rates simultaneously  nosedived.

Adding insult to injury is that even when investments aren't providing the kind of returns we'd like, we still face some tax considerations.

For example, a mutual fund that's lost value can still have a tax cost, thanks to capital gains distributions created by fund manager sales of holdings throughout the year. While fund shareholders have no say in those transactions, it's we shareholders who owe taxes on the earnings. The only consolation is that the distributions will be taxed at the lower long-term capital gains rate.

As for interest, minimal though it may be, we'll also owe taxes on that paltry sum, and at regular tax rates. So maybe it's not so bad after all that those earnings right now are lower.

Related posts:

• Coping with the tax cost of mutual funds
  
• Capital loss deduction increase proposed
  
• Taking the sting out of stock losses at tax-filing time