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Avoiding Mistakes on Your Tax Return

"YOU ARE ONE OF 50,000,000 AMERICANS WHO ...

“YOU ARE ONE OF 50,000,000 AMERICANS WHO MUST FILL OUT AN INCOME TAX RETURN BY MARCH 15. DO IT NOW^ AVOID THE RUSH…. – NARA – 516202 (Photo credit: Wikipedia)

When filing your tax return you want to make sure that you don’t make mistakes.  Mistakes can be costly in terms of additional tax and penalties, as well as the extra time and grief they can cause you.  Most of the time using e-filing software can help you to avoid these mistakes, but you should check over the return anyhow to make certain you haven’t fat-fingered something or if something didn’t go wrong with the software.

The IRS recently issued their Tax Tip 2014-46, which lists out 8 common mistakes that folks make on their tax return, and how to avoid them where possible.  The actual text of the Tip follows below:

Eight Common Tax Mistakes to Avoid

We all make mistakes.  But if you make a mistake on your tax return, the IRS may need to contact you to correct it.  That will delay your refund.

You can avoid most tax return errors by using IRS e-file.  People who do their taxes on paper are about 20 times more likely to make an error than e-filers.  IRS e-file is the most accurate way to file your tax return.

Here are eight common tax-filing errors to avoid:

  1. Wrong or missing Social Security numbers.  Be sure you enter all SSNs on your tax return exactly as they are on the Social Security cards.
  2. Wrong names.  Be sure that you spell the names of everyone on your tax return exactly as they are on the Social Security cards.
  3. Filing status errors.  Some people use the wrong filing status, such as Head of Household instead of Single.  The Interactive Tax Assistant on www.IRS.gov can help you choose the right one.  Tax software helps e-filers choose.
  4. Math mistakes.  Double-check your math.  For example, be careful when you add or subtract or figure items on a form or worksheet.  Tax preparation software does all the math for e-filers.
  5. Errors in figuring credits or deductions.  Many filers make mistakes figuring their Earned Income Credit, Child and Dependent Care Credit, and the standard deduction.  If you’re not e-filing, follow the instructions carefully when figuring credits and deductions.  For example, if you’re age 65 or older or blind, be sure you claim the correct, higher standard deduction.
  6. Wrong bank account numbers.  You should choose to get your refund by direct deposit.  But it’s important that you use the right bank and account numbers on your return.  The fastest and safest way to get a tax refund is to combine e-file with direct deposit.
  7. Forms not signed or dated.  An unsigned tax return is like an unsigned check – it’s not valid.  Remember that both spouses must sign a joint return.
  8. Electronic filing PIN errors.  When you e-file, you sign your return electronically with a Personal Identification Number.  If you know last year’s e-file PIN, you can use that.  If not, you’ll need to enter the Adjusted Gross Income from your originally-filed 2012 federal tax return.  Don’t use the AGI amount from an amended 2012 return or a 2012 return that the IRS corrected.
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Simplified Home-Office Deduction Available

home office

home office (Photo credit: Sean MacEntee)

Beginning with your 2013 tax return you have a new option available for calculating the Home-Office deduction – based solely on the square footage of the dedicated space used for the home office.

Instead of having to maintain records that are directly and indirectly associated with your home office, you can use the simplified method, which applies a flat $5 rate per square foot to the home office space, up to a maximum of $1,500.

The record-keeping and tax preparation simplification is very beneficial: Form 8829 (the usual home-office deduction form) can cause a lot of headaches to prepare, especially if you have more than one home office and you itemize your home mortgage interest and real estate taxes.  For a single home office your tax preparation software will do much of the work for you, but complications like a second home office (not that uncommon in these days of officing-at-home) it can be complex.

Unfortunately, in my experience working with tax returns so far this season, it seems that the simplified method often results in a smaller home-office deduction than the old method.  With the simplified method you get the option to deduct your full real estate taxes and home mortgage interest above and beyond the home office deduction, whereas the old method required you to apportion these expenses between business and personal.  If the new method appeals to you, it is much simpler than gathering all the records and figuring out how to correctly fill out the forms.

The IRS recently issued their a news release, IR-2014-24, which details information about the simplified deduction.

Reminder To Home-Based Businesses: Simplified Option for Claiming Home Office Deduction Now Available; May Deduct up to $1,500; Saves 1.6 Million Hours A Year

Washington – The Internal Revenue Service today reminded people with home-based businesses that this year for the first time they can choose a new simplified option for claiming the deduction for business use of a home.

In tax year 2011, the most recent year for which figures are available, some 3.3 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction) totaling nearly $10 million.

The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.

The new options is available starting with the 2013 return taxpayers are filing now.  Normally, home-based businesses are required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions.  Instead, taxpayers claiming the optional deduction need only complete a short worksheet in the tax instructions and enter the result on their return.  Self-employed individuals claim eht home office deduction on Schedule C Line 30, farmers claim it on Schedule F Line 32, and eligible employees claim it on Schedule A Line 21.

Though some homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A.  These deductions need not be allocated between personal and business use, as is required under the regular method.

Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees, are still fully deductible.

Long-standing restrictions on the home office deduction, such as the requirement that a home office be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.

Further details on the home office deduction and the new option can be found in Publication 587, posted on www.IRS.gov.

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Further Guidance on the One-Rollover-Per-Year Rule for IRAs


As a follow-up to the recent post on this blog The One-Rollover-Per-Year Rule: Revised, the IRS has recently released some additional guidance on the subject, via Announcement 2014-15.

As previously mentioned, the IRS has determined to begin using the one-rollover-per-year rule applied to ALL IRAs that the taxpayer owns, rather than only the affected IRAs that have been involved in a rollover.

According to the Announcement, the IRS fully acknowledges that the previous understanding of the rule was that it applied on an IRA-by-IRA basis.  In fact, there was a Proposed Regulation § 1.408-4(b)(4)(ii) on the books that was to further define the rule as applied only to the involved IRAs.  Ever since the Tax Court decided otherwise in the case Bobrow v. Commissioner (TC Memo 2014-21), the rule has been changed.

According to the recent announcement though, this will not take affect across the board until January 1, 2015.  Prior to that date, presumably, the old interpretation will be used, except, apparently, for Mr. Bobrow’s case (and any further cases that might be tried by the Tax Court).

The IRS Releases Their “Dirty Dozen” Tax Scams for 2014

Image courtesy of chanpipat at FreeDigitalPhotos.net

Image courtesy of chanpipat at FreeDigitalPhotos.net

Each year the IRS puts together a list of the tax scams that are most pervasive to taxpayers, which they refer to as the “Dirty Dozen”.  There has only been a couple of changes to the list this year, most specifically the addition of “pervasive telephone scams”, introduced as #2 on the list this year, and combining “false Form 1099 claims” (on both 2012 & 2013’s list) with “falsely claiming zero wages”.  Identity theft, which is a major issue in the tax return world, tops the list again this year after having first appeared on the list in 2013.  I’ve included the rankings for each item for 2012 and 2013 within the 2014 list below, for your reference.

This list is from IRS’ Special Edition Tax Tip 2014-08.

Don’t Fall for the Dirty Dozen Tax Scams

Every year, people fall prey to tax scams.  That’s why the IRS sends a list of its annual “Dirty Dozen”.  We want you to be safe and informed – and not become a victim.

Taxpayers who get involved in illegal tax scams can lose their money, or face stiff penalties, interest and even criminal prosecution.  Remember, if it sounds too good to be true, it probably is.  Be on the lookout for these scams.

  1. Identity theft.  (2013: #1; 2012: not on the list) Tax fraud using identity theft tops this year’s Dirty Dozen list.  In many cases, and identity thief uses a taxpayer’s identity to illegally file a tax return and claim a refund.  For the 2014 filing season, the IRS has expanded efforts to better protect taxpayers and help victims.  Fide more information on the identity protection page on www.IRS.gov.
  2. Pervasive telephone scams.  (2013: not on the list; 2012: not on the list) The IRS has seen an increase in local phone scams across the country.  Callers pretend to be from the IRS in hopes of stealing money or identities from victims.  If you get a call from someone claiming to be from the IRS – and you know you owe taxes or think you might owe taxes, call the IRS at 1-800-829-1040.  If you get a call from someone claiming to be from the IRS and know you don’t owe taxes or have no reason to think that you owe taxes, then call and report the incident to the Treasury Inspector General for Tax Administration at 1-800-366-4484.
  3. Phishing. (2013: #2; 2012: #2) Phishing scams typically use unsolicited emails or fake websites that appear legitimate.  Scammers lure in victims and prompt them to provide their personal and financial information.  The fact is that the IRS does not initiate contact with taxpayers by email to request personal or financial information.  This includes any type of electronic communication, such as text messages and social media channels.
  4. False promises of “free money” from inflated refunds.  (2013: #5; 2012: #5) The bottom line is that you are legally responsible for what’s on your tax return, even if someone else prepares it.  Scam artists often pose as tax preparers during tax time, luring victims in by promising large tax refunds.  Taxpayers who buy into such schemes can end up penalized for filing false claims or receiving fraudulent refunds.  Take care when choosing someone to do your taxes.
  5. Return preparer fraud. (2013: #3; 2012: #3) About 60 percent of taxpayers will use tax professionals this year to prepare their tax returns.  Most return preparers provide honest service to their clients.  But some dishonest preparers prey on unsuspecting taxpayers, and the result can be refund fraud or identity theft.  Choose carefully when hiring an individual or a company to do your tax return.  Only use a tax preparer that will sign your return and enter their IRS Preparer Tax Identification Number (PTIN). For tips about choosing a preparer, visit www.irs.gov/chooseataxpro.
  6. Hiding income offshore. (2013: #4; 2012: #4) While there are valid reasons for maintaining financial accounts abroad, there are reporting requirements.  U.S. taxpayers who maintain such accounts and do not comply with these requirements are breaking the law.  They risk large penalties and fines, as well as the possibility of criminal prosecution.  The IRS has collected billions of dollars in back taxes, interest and penalties from people who participated in offshore voluntary disclosure programs since 2009.  It is in the best interest of taxpayers to come forward and pay their fair share of taxes.
  7. Impersonation of charitable organizations. (2013: #6; 2012: #10) Taxpayers need to be sure they donate to recognized charities. Following major disasters, it’s common for scam artists to impersonate charities to get money or personal information from well-intentioned people.  They may even directly contact disaster victims and claim to be working with the IRS to help the victims file casualty loss claims and get tax refunds.
  8. False income, expenses or exemptions. (2013: #7; 2012: #6) Falsely claiming income you did not earn or expenses you did not pay in order to get larger refundable tax credits is tax fraud. This includes false claims for the Earned Income Tax Credit. These taxpayers often end up repaying the refund, including penalties and interest for facing criminal prosecution.
  9. Frivolous arguments. (2013: #9; 2012: #8) Frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe.  The IRS has a list of frivolous tax arguments that taxpayers should avoid.  While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or ignore their responsibility to pay taxes.
  10. Falsely claiming zero wages or using false Form 1099. (2013: #10 & #8; 2012: #9 & #7) Filing false information with the IRS is an illegal way to try to lower the amount of taxes owed.  Typically, fraudsters use a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 as a way to improperly reduce taxable income to zero.  The fraudster may also submit a false statement denying wages and taxes reported by a payer to the IRS.
  11. Abusive tax structures. (2013: #11; 2012: #11) These abusive tax schemes often involve sham business entities and dishonest financial arrangements for the purpose of evading taxes.  The schemes are usually complex and involve multi-layer transactions to conceal the true nature and ownership of the taxable income and assets.  The schemes often use Limited Liability Companies, Limited Liability Partnerships, International Business Companies, foreign financial accounts and offshore credit/debit cards.
  12. Misuse of trusts. (2013: #12; 2012: #12) There are reasonable uses of trusts in tax and estate planning.  However, questionable transactions also exist.  They may promise reduced taxable income, inflated deductions for personal expenses, the reduction or elimination of self-employment taxes and reduced estate or gift transfer taxes.  These trusts rarely deliver promised tax benefits.  They primarily avoid taxes and hide assets from creditors, including the IRS.

Tax scams can take many forms beyond the “Dirty Dozen”.  The best defense is to remain vigilant.  Get more information on tax scams at www.IRS.gov.

Use Direct Deposit for Your Tax Refund

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

When filing your tax returns this year, consider using direct deposit for your refund.  By doing this, you don’t have to worry about the mail “making the trip”, and also you won’t have to make a visit to the bank to cash or deposit the refund.

On top of that, direct deposit refunds usually are deposited more quickly than a check is delivered by mail, getting you the money faster.  Among the many alternatives for the places you can have the money deposited to are virtually any bank account, as long as you have the routing and account information, as well as transferring your funds to your TreasuryDirect account to purchase US Treasury marketable securities and savings bonds.  You can also split your refund to be deposited in two or three different accounts – the account(s) need to be title in your name, your spouse’s name, or both, not someone else’s account.

Of course, if you owe money to the IRS from past tax returns, your refund will be used to pay your debt first and foremost.  You also have the option to apply any leftover refund toward your tax obligation for the current year as well.

If your refund is less than $1 (which is highly unlikely since tax figures these days are generally rounded to the nearest dollar), you have to specifically request a refund from the IRS in writing.

Setting up direct deposit is a relatively simple activity, whether you’re using tax software or paper filing your return.  You just need to fill out the form with the appropriate bank routing and account information, and the deed is done.  If requesting direct deposit to multiple accounts, you’ll need to use Form 8888.  Form 8888 is also used to purchase paper I-series US Savings Bonds with your refund (limited to $5,000).

So do yourself a favor this year, and set up direct deposit of your tax refund.  It’s flexible, convenient, simple, and secure.

Get Your Kids to Help You With Your Taxes

Sometimes as parents we get overwhelmed with the costs of raising kids.  What with the high cost of soccer camp, video games, and lessons on the clarinet, it can be woefully expensive raising kids.

Sometimes though, there are surprising ways that kids can help out with costs – and your income taxes is one of those places where having kids does help.  The IRS recently published their Tax Tip 2014-11 which lists eight ways that having children can help to lower your taxes.

The actual text of Tax Tip 2014-11 follows:

Eight Tax Savers for Parents

Your children may help you qualify for valuable tax benefits.  Here are eight tax benefits parents should look out for when filing their federal tax returns this year.

  1. Dependents. In most cases, you can claim your child as a dependent.  This applies even if your child was born any time in 2013.  for more details, see Publication 501, Exemptions, Standard Deduction and Filing Information.
  2. Child Tax Credit. You may be able to claim the Child Tax Credit for each of your qualifying children under the age of 17 at the end of 2013.  The maximum credit is $1,000 per child.  If you get less than the full amount of the credit, you may be eligible for the Additional Child Tax Credit.  For more about both credits, see the instructions for Schedule 8812, Child Tax Credit, and Publication 972, Child Tax Credit.
  3. Child and Dependent Care Credit. You may be able to claim this credit if you paid someone to care for one or more qualifying persons.  Your dependent child or children under age 13 are among those who are qualified. You must have paid for care so you could work or look for work.  For more, see Publication 503, Child and Dependent Care Expenses.
  4. Earned Income Tax Credit.  If you worked but earned less than $51,567 last year, you may qualify for EITC.  If you have three qualifying children, you may get up to $6,044 as EITC when you file and claim it on your tax return.  Use the EITC Assistant tool at www.IRS.gov to find out if you qualify or see Publication 596, Earned Income Tax Credit.
  5. Adoption Credit. You may be able to claim a tax credit for certain expenses you paid to adopt a child.  For details, see the instructions for Form 8839, Qualified Adoption Expenses.
  6. Higher education credits. If you paid for higher education for yourself or an immediate family member, you may qualify for either of two education tax credits.  Both the American Opportunity Credit and the Lifetime Learning Credit may reduce the amount of tax you owe.  If the American Opportunity Credit is more than the tax you owe, you could be eligible for a refund up to $1,000.  See Publication 970, Tax Benefits for Education.
  7. Student loan interest. You may be able to deduct interest you paid on a qualified student loan, even if you don’t itemize deductions on your tax return. For more information, see Publication 970.
  8. Self-employed health insurance deduction. If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid to cover your child under the Affordable Care Act. It appies to children under age 27 at the end of the year, even if not your dependent.  See Notice 2010-38 for information.

Where to get IRS Forms and Publications

Image courtesy of Arvind Balaraman at FreeDigitalPhotos.net

Image courtesy of Arvind Balaraman at FreeDigitalPhotos.net

When you are preparing your taxes, inevitably you run across a form or publication that you need in order to complete your filing.  But where can you find all these forms and publications?

The IRS recently published their Tax Tip 2014-06, which details information about where you can find these forms and publications.  The actual text of the Tip follows below.

Four Ways to Get IRS Forms and Publications

The IRS offers free tax forms and publications on many topics.  Here are four easy ways to get the tax products you need from the IRS:

  1. On the Internet.  Get everything you need 24 hours a day 7 days a week on www.IRS.gov. To view and download tax products, click on the ‘Forms and Pubs’ tab.  Many products appear online before they’re available on paper.
  2. Order by phone.  Call 1-800-TAX-FORM (1-800-829-3676) Monday through Friday, 7 a.m. to 7 p.m. local time.  Hours of service in Alaska and Hawaii follow Pacific Time.  You’ll typically receive your order by mail within 7 to 10 days.
  3. In IRS Offices.  Get the tax products you need at IRS Taxpayer Assistance Centers across the country.  Visit www.IRS.gov to find the nearest IRS Center.  Select the ‘Help and Resources’ tab, and then click on ‘Contact Your Local IRS Office.’ Use the ‘Office Locator’ tool to search for the closest office by zip code.  You can also select your state for a list of offices and services available at each office.
  4. In Your Community.  Many libraries and post offices offer free tax forms during the tax filing season.  Some libraries also have copies of common IRS publications.

Updates to IRS Fees for Installment Agreements and OIC

Image courtesy of renjith krishnan at FreeDigitalPhotos.net

Image courtesy of renjith krishnan at FreeDigitalPhotos.net

Just like pretty much everything else in the world, the cost of doing business with the IRS has gone up.  The good news is that some fees did not increase for calendar year 2014, but some fees have gone up by significant rates.

Installment Agreement

This is where you have a balance due to the IRS for unpaid taxes, penalties and interest, and you’re unable to pay the amount at the present time in a lump sum.  So you set up an installment agreement with the IRS – where you agree to pay a set amount on a monthly basis until your balance is paid off.

If you set up a direct-debit payment plan – where the payment is pulled directly from you bank account – the fee to set this up remains unchanged from 2013 at $52.  This is the preferred method to set up such a plan, for the obvious reason that the IRS has direct access to debit your account for the payment, rather than relying on you to make the payment manually.

On the other hand, if you set up your installment agreement so that you control when the payment is sent (by paper check, for example), the fee for setting up this type of arrangement has increased in 2014 from $105 to $120, an increase of 14.2%.  Likewise, if you already have an agreement set up with the IRS and you need to restructure or reinstate a suspended installment agreement, the fee has increased from $45 to $50, an increase of 11.1%.

Offer in Compromise

An Offer in Compromise (OIC) is where you have a balance due to the IRS and you’re petitioning the IRS to settle the debt for less than the original balance due. (Sounds wonderful, doesn’t it? It’s not as easy as it sounds.)

In cases where your debt to the IRS is so great and your assets and income are so little that it is unlikely you’d be able to pay off the debt within a reasonable period.  There is a pre-qualification process that can help you to understand if you may be eligible for an OIC – the Offer in Compromise Pre-Qualifier.  Keep in mind that this is only a pre-qualification, there are no guarantees that the IRS will accept your application and offer. *Be very wary of tax professionals who claim that they can get you an OIC to pay your debt for “pennies on the dollar”. As with most things, if it sounds too good to be true, it probably is.

So if you pass the pre-qualification tests, you can then submit an application for an Offer in Compromise.  The fee for this application has increased in 2014, from $150 to $186, an increase of 24%.  If the application is approved, you have the option of either paying the compromise amount in one lump sum, or by periodic payments (much like the installment agreement above).  There is no additional fee for an installment agreement for OIC.

If you meet the low income requirements you will not need to send the application fee or make monthly payments while your offer is being reviewed.

Looking for free tax preparation? IRS provides some tips

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

For lots of people, the option of free tax preparation is an excellent way to go.  There are quite a few providers who will allow you to prepare a simple return for free (more complexity equals more cost, of course).  It’s a good idea to go through the process if you have the aptitude, because it’s helpful to understand the ins and outs of a tax return.  Knowing about how your tax return works can help you to have a better understanding of ways to reduce your taxes in the future.

When using a commercial organization to prepare your return for free, beware of the “add-ons” that make a free process extremely costly.  Among these are – add-on state filing (sometimes more costly than federal preparation!), refund anticipation loans (like a payday loan, only more expensive!), and payment via your refund (another type of refund anticipation loan, with the associated costs).  There’s a reason these organizations offer “free” return filing – by doing so they look like a white knight, and if they can talk you into these add-ons, they’re making a mint off it as well, for very little effort.

On the other hand, maybe you need some assistance with your return.  The IRS provides a couple of programs, VITA (Volunteer Income Tax Assistance) and TCE (Tax Counseling for the Elderly) which provide IRS-trained volunteer help with preparing your return, for no cost to you as long as you qualify.

Recently the IRS issued their Tax Tip 2014-02, which provides their Top 10 Tips for free tax preparation – the actual text of the Tip follows below.

Top 10 Tips about Free Tax Preparation

Each year millions of people have their tax returns prepared for free by volunteers.  These volunteers are part of the IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs.

Here are the top 10 tips the IRS wants you to know about VITA and TCE:

  1. The IRS sponsors both the VITA and TCE programs.  They work with local community groups to both train and certify volunteers.
  2. The VITA program generally offers free tax return preparation and e-filing to people who earn $52,000 or less.
  3. The TCE program offers help mainly to people age 60 or older.  Volunteers specialize in tax issues unique to seniors.  AARP is part of the TCE program and helps taxpayers with low to moderate incomes.
  4. VITA and TCE provide free electronic filing.  An e-filed tax return is the safest and most accurate way to file.  Using e-file combined with direct deposit is the fastest way to get your refund.
  5. Using VITA and TCE may help ensure you get all the tax credits  and deductions you’re able to claim.  For example, credits that you may qualify for include the Earned Income Tax Credit, the Child Tax Credit and the Credit for the Elderly.
  6. Some sites provide bilingual help for people who speak limited English.
  7. VITA provides free tax assistance to military members and their families.  Volunteers help with tax issues related to the military.  These include special rules and tax benefits for those serving in combat zones.
  8. At some VITA sites, you can also prepare your own federal and state tax returns using free web-based software.  This is an option if you don’t need much help or don’t have a home computer.  Volunteers are on site to guide you if you need help.  The self-preparation options generally offer free tax return preparation software and e-filing to people who earn $58,000 or less.
  9. For more than 40 years, the IRS has partnered with nonprofit and community organizations to offer these vital services.  Thousands of VITA and tCE sites around the nation will open in late Jan. and early Feb.
  10. Visit www.IRS.gov to find the nearest VITA site.  Search the word ‘VITA’ and then click on “free Tax Return Preparation for You by Volunteers.”  Site information is also available by calling the IRS at 800-906-9887.  To locate the nearest AARP tax-Aide site, visit www.aarp.org, or call 888-227-7669.

Watch out for scams at tax time

Image courtesy of chanpipat at FreeDigitalPhotos.net

Image courtesy of chanpipat at FreeDigitalPhotos.net

You’ve probably seen news reports about how identity theft is rampant around the time tax returns are being filed.  All sorts of nefarious schemes are out there, via the phone or email.

The IRS recently published their Special Edition Tax Tip 2014-02, which details the warnings from the IRS about scams.  The full text of the Tip is below.

IRS Warns of Tax-time Scams

It’s true: tax scams proliferate during the income tax filing season.  This year’s season opens on Jan. 31.  The IRS provides the following scam warnings so you can protect yourself and avoid becoming a victim of these crimes:

  • Be vigilant of any unexpected communication purportedly from the IRS at the start of tax season.
  • Don’t fall for phone and phishing email scams tha use the IRS as a lure.  Thieves often pose as the IRS using a bogus refund scheme or warnings to pay past-due taxes.
  • The IRS doesn’t initiate contact with with taxpayers by email to request personal or financial information.  This includes any type of e-communication, such as text messages and social media channels.
  • The IRS doesn’t ask for PINs, passwords or similar confidential information for credit card, bank or other accounts.
  • If you get an unexpected email, don’t open any attachments or click on any links contained in the message.  Instead, forward the email to phishing@irs.gov. For more about how to report phishing scams involving the IRS visit the genuine IRS website, www.IRS.gov.

Here are several steps you can take to help protect yourself against scams and identity theft:

  • Don’t carry your Social Security card or any documents that include your Social Security number or Individual Taxpayer Identification Number.
  • Don’t give a business your SSN or ITIN just because they ask.  Give it only when required.
  • Protect your financial information.
  • Check your credit report every 12 months.
  • Secure personal information in your home.
  • Protect your personal computers by using firewalls and anti-spam/virus software, updating security patches and changing passwords for Internet accounts.
  • Don’t’ give personal information over the phone, through the mail or on the Internet unless you have initiated the contact and are sure of the recipient.
  • Be careful when you choose a tax preparer.  Most preparers provide excellent service, but there are a few who are unscrupulous.  Refer to Tips to Help You Choose a Tax Preparer for more details.

For more on this topic, see the special identity theft section on IRS.gov.  Also check out IRS Fact Sheet 2014-1, IRS Combats Identity Theft and Refund Fraud on Many Fronts.

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