Paying taxes is bad enough, but falling prey to a tax scam can be even worse.
Many of the same tax scams crop up year after year, ensnaring new victims all the time.
Being aware of some of the potential pitfalls can make filing taxes easier and keep you out of trouble with the IRS.
Whether you are getting ready to file your taxes or still gathering the required paperwork, you need to be aware of these common tax scams.
Doing your homework ahead of time can protect you from scammers and bogus tax dodges as the April 15 tax deadline approaches.
The tax filing season is prime time for identity thieves.
After all, your tax return contains a wealth of information identity thieves can use to get credit in your name, take out loans and otherwise make your life miserable.
In the words of Wilfredo Ferrer, the United States Attorney for the Southern Florida (quoted by CBS News):
Identity thieves can also use personal information they have already gathered to file bogus returns and claim refunds to which they are not entitled.
Such thieves often file early in the hopes that they will receive a refund before the real taxpayer even knows something is amiss.
You can protect yourself from these kinds of scams by:
Sometimes the very people you hire to prepare your taxes turn around and violate that trust instead. As IRS commissioner John Koskinen has said (quoted by CNN),
Tax preparer fraud takes a number of different forms, from individuals who steal Social Security numbers for their own use to preparers who try to boost client refunds by inventing dependents or claiming bogus credits.
Remember that you are responsible for your return, even if it was prepared by someone else.
You can help protect yourself from untrustworthy preparers by:
There is a lot of misinformation out there regarding taxes. For example, you may have heard that:
Whatever your political beliefs, bogus tax theories could get you into big trouble with the IRS. (And for what it’s worth, here is the crucial amendment to the US Constitution regarding taxation).
Every tax dodge of this kind that has been tested by the IRS has been found lacking.
Think long and hard before you try to avoid paying taxes you owe the IRS.
Failing to do so will undoubtedly cost you more in terms of money, time, legal fees and even jail time, than simply paying what you owe.
Phone scams tend to make the rounds as the April 15 deadline gets closer. Taxpayers may receive a phone call from someone claiming to be with the IRS.
The caller may request a variety of personal information, from Social Security numbers and birth dates to the names and birth dates of children. According to Danny Werfel, IRS Acting Commissioner:
If you receive such a call, just ask yourself: does it seem likely that the IRS would not already know your Social Security number? Keep in mind that the IRS never:
If you feel that a call is suspect, ask for the caller’s phone number and offer to call them back; most scammers will abruptly hang up.
The IRS does not contact taxpayers via email, but people keep falling for this common scam.
Phishing emails claiming to come from the IRS start appearing in inboxes in early January and continue through the April 15 tax filing deadline. Here is a typical one:
Subject: Notice of Underreported Income
From: no-reply@irs.gov
Taxpayer ID: smith-00000174073547US
Tax Type: INCOME TAX
Issue: Unreported/Underreported Income (Fraud Application)
Please review your tax statement on Internal Revenue Service (IRS) website
(click on the link below):
review tax statement for taxpayer id: smith-00000174073547US
Internal Revenue Service
If you receive such an email, you should:
Believe it or not, the IRS is not giving away free money.
These free money scams are attempts to gather Social Security numbers, bank information and other personal data. Thieves often set up shop in poor areas and target low income workers and the elderly.
In the words of a warning from the Federal Trade Commission:
The story is different from year to year, but the bottom line is always the same – the IRS has a program that is giving money to eligible taxpayers, and it’s important to sign up today.
If you think you may legitimately be owed money by the IRS, contact the agency directly. Otherwise you can:
Giving money to charity is great, and it can even lower your tax bill.
Scam artists know that, and they use the generosity of taxpayers and their desire to pay less in taxes to separate them from their hard-earned money.
When tax season approaches, scam artists may set up fake charities to prey on unsuspecting taxpayers.
The charity might look legitimate, but the contribution will not be eligible for the promised tax deduction.
The IRS is well aware of the problem. Some things to look for when considering donating to charities for tax purposes:
You can protect yourself from this common scam by checking out all charities carefully.
A number of independent agencies keep track of charities, and they can help you sort out the legitimate causes from the scams.
Remember: you have to pay taxes, but you don’t have to fall for scams!
[vc_row][vc_column][vc_column_text] [simple_tooltip content='** Credit card required at enrollment. If you`re not completely satisfied within your…
[vc_row][vc_column][vc_single_image image="8699" img_size="full"][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading text="What We Love About Identity Guard" font_container="tag:h2|font_size:30px|text_align:left|color:%23446084" google_fonts="font_family:Coda%3Aregular%2C800|font_style:400%20regular%3A400%3Anormal"][vc_column_text] $2000 emergency cash if…
[vc_row][vc_column][vc_column_text] Dumpster Diving Did you ever wonder what kinds of people dig through dumpsters in…
[vc_row][vc_column][vc_column_text] If you’re worried about identity theft and want to stop anyone trying to gain…
What if I were to tell you that 15 million Americans fall victim to…