Tax seasons have the potential to bring out the best in us and the worst in some others. Many of us think about giving to charity around this time of the year and making a positive difference in someone’s life. Still, some individuals think of how they can dupe us into a tax scam and cause unnecessary havoc with our lives. We’ve identified a few common tax scams you should be aware of and how you can protect yourself. Let’s discuss Tax Preparer Fraud and Free Money Schemes.
Tax Preparer Fraud
The majority of tax preparers are good, reputable folks who provide quality service. However, some claim to be tax preparers when they’re not, or they may encourage you to claim improper credits, deductions, or exemptions in the hopes of boosting your refund. Their sole purpose is to gain access to your personal information and defraud you. Choose carefully when hiring someone to prepare your tax return, and only use a preparer who signs the return they prepared for you and enters their IRS Preparer Tax Identification Number. Regardless of who may have helped you to complete your tax return, you are responsible for the information filed and will be held financially accountable for any misreporting. For tips regarding how to choose a tax preparer, visit www.irs.gov/chooseataxpro.
“Free Money” and Other Social Security Schemes
There is no such thing as “free money.” However, this hasn’t stopped some scammers from preying on individuals with low income, the elderly and church members. These scammers use flyers and ads with bogus promises of
refunds that don’t exist. The schemes target individuals who have little or no income and generally don’t have to file a tax return. In cases where a taxpayer may not even need to file an income tax return based upon low income, some taxpayers may be talked into filing a return with fictitious claims for refunds or rebates based on false statements or the promise of non-existent Social Security refunds or rebates. In cases where the victim may actually be due a legitimate tax credit or refund, scammers fraudulently inflate income or use other false information to file a return for a larger refund.
Tax season is one of the more stressful times of the year. It is important to keep a cool head and not let yourself become overwhelmed by the numbers. When it comes to these two tax schemes, trust your gut. If someone or
something seems too good to be true, that someone or something probably is..