How do you like your hard earned money and your personal information? Do you like it to stay personal or would you share it with criminals? Personal, obviously - but thousands of people still fall for tax scams every year. Here are some examples and how to avoid them (hint- use trustworthy companies).
Types Of Tax Scams
Are you worried that an email you got from someone isn't the email you were expecting? Tax fraud happens over the phone and over email to thousands of Americans every year. Here are the general types - we'll explore examples after.
You probably already know what a phishing scam is. It's when someone pretends to be someone trustworthy to steal your information. During tax season, that's usually people claiming to be accountants or government agencies.
Phone scams are the same thing as phishing scams but over the phone. A lot of the time these criminals will use a sense of urgency or fear to convince you to give them your information. The IRS will never ask you to give out sensitive information over the phone, so don't fall for this. The best thing you can do is report the number with your phone company.
Identity Theft Scams
When it comes to tax fraud, almost all types of scams are identity theft scams. It's a general category defined by someone tricking you into giving out sensitive information.
Too Good to Be True Returns
Sometimes you'll get a phone call from a criminal claiming they can get you an outrageously high return. These are too good to be true. What they're after is, you guessed it, your information. When you "file" with them, they'll record your information and use it in the future. Chances are they won't actually file anything for you, so you won't only be late on your taxes, but you won't get a return.
Fake Filing Agencies
The same general idea as the scam above, these agencies offer to do your taxes at a low fee. They're also just looking to get your information and are not trusted tax professionals.
Charities That Aren't Do-Gooders
If you're going to donate to a charity, that's wonderful. They do great work and make many people (or animals') lives better. . . but only if they're legitimate. Before you donate, you need to look up their charity status. Most charities operate under a charitable tax identification number and that's public information.
Why is this relevant to taxes? You can write off donations on your taxes. It's a little perk the government gives to encourage good-doing. But there are "charities" out there that scam consumers into donating and they're not 503C non-profits. That means you can get in trouble for claiming false write-offs. Do your due diligence before you donate.
"Hidden Claim" Specialists
Ever heard or seen a tax professional that promises to get you more money because they know the "loopholes"? Or that they can get you returns that you're not getting but could-be claiming? Again - it's not true. Most tax professionals (the trustworthy ones) can find you maybe an extra $100 - $200 to get back, but it won't be excessive. The IRS is pretty tightly wound when it comes to closing loopholes.
Never should you ever move money to another country to avoid paying taxes? It's a shady practice and is illegal in most cases. If a tax "professional" ever suggests this, get out as soon as possible.
Overly Complex Claims
If a tax "filer" tries to get you to claim all sorts of strange things on your taxes because they say you'll get more back, avoid it. You should never "get creative" with your taxes. The IRS doesn't appreciate this kind of artistry.
Tax Scams 2019: What to Look Out For
With tax season just one month away at the time of this writing, we're seeing more and more scams. Most of them are email phishing scams that have an impeccable resemblance to a legitimate tax company. These emails have the exact tone, logo, and sometimes even email address (almost) as trustworthy companies.
This official looking email tricks more people every year. Remember that the IRS will never ask you to provide sensitive information over a non-secure server, like email.
Fake Tax Payment Receipt
This is a big one and it's no wonder why. No one wants money taken out of their account unexpectedly. In this scam, a malicious sender will send an email with something in the subject like "Tax payment posted" or "Tax payment was deducted from your account". When you click to open the email, it says about the same thing in some more words.
Then you open the "receipt" for the "transaction", which adds a virus to your computer. Never open any emails from unknown senders like this - or at least never open their attachments!
How To Spot Fake Scams
Now that you know some types of scams, and you know that scams can make their emails look identical to trustworthy sites, you may be panicking. You don't have to. Here are a few signs this is a tax scam and you should flag then delete it right away.
They Ask You to Email Information
Like we talked about before, the IRS will never ask for sensitive information over email. They don't communicate with taxpayers over email - literally ever.
It Has Strange Wording
The IRS doesn't play around with wording - or they wouldn't if they ever sent emails (which they don't). Watch out for wording like Sir or Madam. A taxpayer is another "title" that stinks of a scam.
Report What You Suspect
Finally, if you think you have a suspicious email, you can simply forward it to the IRS. They'll look into the scam and it'll be out of your hands (and out of your inbox). To do so, simply forward the email to email@example.com.
Report and Delete
If you see a suspicious email, the best thing you can do is not open it. But if you do, forward tax scams to the email address above. Never open any attachments or reply to the sender. This knowledge and these tips should help keep you safe for this tax season and the ones to come. Need to print safe tax documents, like W2 forms? Paystub creator is your one-stop shop! Create your W-2 Form today!