Tax season begins Monday, January 28th, and unfortunately, some will discover then they are a victim of tax scams or tax identity theft, which occurs when someone uses your stolen Social Security number to file a tax return and claim a fraudulent return. Ahead of Tax Identity Theft Week, which is January 29th through February 2nd, here are five scams and schemes to avoid.
Take steps to protect yourself from tax identity theft. Actively and frequently monitor your bank accounts, leave your Social Security card at home or in a safe deposit box in a bank, and, if possible, have important tax documents mailed to your work address or a personal PO box.
Ensure you are visiting a legitimate online tax filing platform and practice web safety. Create a strong password when selecting your login credentials, double check the URL is correct, and use security software with anti-virus protections. If you receive an unknown or suspicious email attachment or link, do not click on it; if you’re unsure if the attachment or link is authorized, call the tax filing platform directly. Additionally, keep in mind that the IRS will never initiate contact via email with a taxpayer about a bill or return.
Be cautious of unsolicited phone calls. Every year, criminals posing as IRS agents make bogus phone calls to taxpayers threatening arrest or deportation if the taxpayer doesn’t pay a fraudulent tax bill. To make the call seem official or legitimate, these criminals may alter the caller ID number or use the taxpayer’s name and other personal information. Remember, an agent will never threaten to involve law enforcement if immediate payment is not made, nor will they ever ask for credit or debit card details over the phone.
Be wary of abusive tax shelters, which are schemes that claim to inflate refunds or help avoid paying income taxes. Once the IRS has determined a taxpayer’s involvement in an abusive tax shelter, the participant(s) will face the penalty of owing back-taxes with accrued interest. Though not all tax shelters are abusive or illegal, if the offer sounds too good to be true, it probably is.
Work with a tax preparer you trust. If you want to work with someone directly instead of filing taxes yourself through an online tax filing platform, be sure to choose a licensed tax preparer, like a certified public accountant or attorney, who is registered with the IRS. You can use a directory look-up service to check the credentials and qualifications of the preparer you’ve selected. Always be sure, too, to review your return before signing, and never sign an incomplete or blank return.
Whether you owe money, receive a refund (if so, we suggest paying off debts or starting an emergency fund), or break even, it’s important to knock this task off your list - the safe way.