As you prepare your taxes this filing season beware of these common scams, according to the IRS.
Identity thieves often attempt to use a taxpayer’s identity and personal information to file a phony tax return and then collect a fraudulent refund.
Phishing scams usually use unsolicited emails or fake websites that look legitimate to get consumers to disclose personal and financial information.
Return Preparer Fraud
Always do your research, ask for recommendations, or read reviews before hiring a tax professional.
Hiding Income Offshore
The IRS has increased its efforts to catch taxpayers hiding income outside the country to evade paying taxes. There are legitimate reasons to keep accounts overseas—but be sure to file the required paperwork.
‘Free Money’ Scams
Scammers take advantage of taxpayers by promising them free money from the government or promising refunds that don’t exist.
False/Inflated Income and Expenses
Don’t file a return that includes income that was not actually earned, or expenses not paid to try and increase the amount of refundable credits.
False Form 1099 Refund Claims
Some taxpayers try to pull a fast one by including false information on forms to justify a refund claim.
The IRS has heard plenty of illogical and outlandish arguments from taxpayers in an effort not to have to pay owed taxes.
Falsely Claiming Zero Wages
Scammers file false information about their wages in an effort to reduce their taxable income to zero—it’s a bad idea, don’t do it.
Abuse of Charitable Organizations and Deductions
Some scammers attempt to use charitable organizations to shield income or assets from being taxed, or get non-cash assets overvalued by the organization.
Disguised Corporate Ownership
Corporate entities created in an effort to conceal the true ownership of a business and underreport income or claim fictitious deductions.
Misuse of Trusts
Some taxpayers attempt to set up and misuse trusts in an effort to reduce the amount of income subject to tax.
Tax time is prime hunting season for scammers looking to prey on unsuspecting taxpayers. Here’s what you need to be on the watch for so you don’t become a victim.