Tis the season for tax scams. As always, scammers are out in full force, looking for ways to get their hands on some of your hard-earned cash. Before you trust someone with your tax information, stop and ask yourself whether or not it’s too good to be true. Also, be on the alert for scams that involve stealing your identity.
Here are four tax scams to watch out for:
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1. Early Filers Steal Your Refund
One of the growing problems facing taxpayers and the IRS is that of tax identity theft. Scammers use your Social Security number to file a tax return that results in a refund. The scammer gets your refund, and when you try to file your own taxes, you find out that it’s already been done. It can take months to sort out the issue.
This year, some taxpayers are being held up by delays with certain forms. An unscrupulous scammer can file a simpler tax return before you are even allowed to make the attempt. Be aware of the dangers, and if you are blocked from filing because a refund has already been issued, visit IRS.gov and file a Form 14039, along with proper identification.
2. “Special” Grants and Credits
There are some scammers who insist that you can claim “special” grants, credits, or exceptions due to certain characteristics, such as race or religion. One of the common scams is to tell African-Americans that they can claim slavery-era reparations on their taxes. There are plenty of other similar scams that claim you can receive special tax treatment do to some erroneous reason.
Scammers pose as tax professionals, promising that they can help you claim these special tax privileges. In reality, after showing you how much you could get back, they ask for a fee, and then disappear — leaving you with a tax audit possibility.
There are no special tax treatments for race, ethnicity, religion, or other characteristics. Be wary of anyone who claims that you can get special tax grants or credits in this manner.
Tax time phishing attempts are all about obtaining your personal financial information. You receive an email telling you that your refund is being held up for some reason. You might be told that the account number you provided for direct deposit isn’t working. In some cases, you might be told that you owe money, or that you are missing some information.
You answer the email immediately because you’re worried about the situation. After providing the requested information, the scammers now have what they need to drain your bank account or steal your identity.
Realize that the IRS won’t send you emails requesting missing information. The IRS uses snail mail, so if you get an email asking you for personal information, don’t bite. Don’t let worry push you into making a poor decision. The IRS won’t ask for this information via email.
4. Shady Tax Preparers
Are you sure your tax preparer can be trusted? Realize that CPAs have to be registered with a state board of accountancy, and tax attorneys should be registered with the bar. Additionally, legitimate tax preparers should have a Tax Preparer Identification Number issued by the IRS. If the tax preparer won’t share this information, that can be a red flag.
Also, make sure that you check with the Better Business Bureau. You can also look at the premises. Has an effort been made to create a professional environment? If you are working with someone who appears to be in a very temporary space, that is a red flag indicating that you could be dealing with a scammer.
You need to be careful, since these scammer will have everything they need to to steal your identity and possibly raid your bank account. Preparing a tax return requires a great deal of personal financial information, and you don’t want that in the hands of the unscrupulous.
Miranda is a professional personal finance journalist. She is a contributor for several personal finance web sites. Her work has been mentioned in and linked to from, USA Today, The Huffington Post, The San Francisco Chronicle, The New York Times, The Wall Street Journal, and other publications. She also has her own personal finance blog: Planting Money Seeds.