The Most Prolific W2 Scams Explained - And How To Avoid Them
Is your business vulnerable to W2 scams? Have you recently received a suspicious email or phone call? The IRS and FBI have been warning business owners about a wide range of W2 scams, and you may not be prepared. If you're wondering about how to avoid W2 phishing and W2 fraud, this article's for you.
We'll describe the most common scams and help you ensure your business doesn't get hit by fraudsters. Keep reading for more.
What Is Phishing?
Phishing is on the rise, costing American businesses more than $500 million each year. But what is phishing, exactly, and how can it be avoided? If you get a suspicious email, you're going to delete it immediately. You can see misspelled words, a name you're unfamiliar with, or other blatant errors that put doubt into your mind.
But what if you get a polite, well-worded email from the CEO of your company? They're asking you to send over some employee information, and the request is urgent. That, in a nutshell, is a phishing scam. The hacker poses as a CEO or another executive and politely asks for social security numbers and wage information.
How could you refuse? But you must, because that's a common W2 scam. If you're unsure as to your company's rules about sending personal information by email, make sure you check. Chances are, it's never supposed to be done.
How Common Are Phone Scams?
Phone call scams are also common during tax season. Someone posing as an IRS agent asks for W2 information or social security numbers. The IRS itself has posted a list of common scams, with phone fraud as an ongoing concern. The scammer might threaten to revoke your business license or even place you under arrest if you don't wire them money or give them your employees' W2 information.
This is obviously fake, but thousands of people fall for the W2 phone scam each year. The IRS doesn't contact people and demand sensitive information, and they don't make threats by phone. If there is an outstanding tax bill, they will contact you by mail first. They would never ask you to wire them money or give them your credit card number over the phone.
The IRS also doesn't contact the local police over an unpaid tax bill. They don't deport people, and they don't make you pay without having a chance to dispute the amount of the bill. If you think you've fallen victim to a phone scam, it's important to report it right away. Contact the IRS and give them the phone number of the scammer. Don't be a victim, always be on the lookout!
How To Find A Reputable Tax Preparer?
In general, you should not give out W2 information to anyone besides your employees. If you use a tax preparer for personal or business taxes, you'll want to research their reputation online and look for customer complaints. You don't want to accidentally use a fraudulent tax return company.
There are unscrupulous tax preparers who will use your information and steal your identity. If you're an employee who's worried about W2 fraud, make sure that you're saving your pay stubs throughout the year. And double-check your tax return before you file. Look for a tax preparer with at least 10 years of experience, and make sure that they have state and national certification.
A reputable tax preparer will also have a PTIN or Preparer Tax ID Number. If you're promised a huge amount of money for a return, chances are that you're dealing with a fraudulent tax preparer. You should never claim more deductions than you're allowed, and you should always stick to the numbers on your W2.
Finally, you can check with the Better Business Bureau to see whether your tax agency has a good track record. You're looking for a grade of A+ and zero customer complaints.
Is Identity Theft On The Rise?
Unfortunately, identity theft is still commonplace. A hacker recently stole the data of more than 125 million people. The problem with identity theft is that hackers don't have to call you, email you, or prepare your taxes. They can rip you off without you even knowing. So how can you prevent identity theft and remote W2 scams?
In addition to saving your pay stubs, you should check your credit report at least once per year. Are the accounts correct? Is your personal information up-to-date? Keep track of your bills and make sure you're not being overcharged. If you have automatic bill payment, make sure that you're paying the amount on the bill.
It's easy for hackers to get into your personal or business bank accounts, so make sure your bank has the proper online security. If you have an incident of identity theft, it's probably time to change your bank. The IRS also advises people to keep their social security card at home, not in their wallet.
If you were to lose your wallet, you'd be handing thieves your entire identity in a handy, easy-to-use package. Never give out your personal information by phone, especially if you suspect W2 fraud. There is no reason that any company besides the IRS would need to see your W2 form.
More Pro Tips About Avoiding W2 Scams
If you suspect a scam, it's better to be cautious and not give out your information. W2 scams are most common during tax season, so don't click on any email that looks suspicious. Vigilance is key when it comes to avoiding scammers, phishers, and hackers. They want your money and access to your personal information - and they won't back down.
Always check your W2s when they arrive. You should see your yearly income, all of your deductions, and your federal and state withholding. You should get three copies: one for your federal tax return, one for your state return, and one for your records. We help businesses of any size generate secure pay stubs and W2s. Be sure to check out these 9 IRS red flags to watch out for!
Browse through our website and blog articles, and send us an email with any questions. We also have 24/7 customer service available by phone, and we're looking forward to talking with you! Check out our form W2 generator if you are in need of a W2.