Are you preparing for tax time? The scammers are too!
The end of the year often feels hectic. We’re spending time with family, celebrating the holidays, and planning for the coming year. This is exactly what scammers rely on to separate you from your hard-earned money.
What to do with a possible scam
The first step to staying ahead of scammers is to be very critical of all communications you receive that aren’t from a trusted sender. When you receive a text, email, or call about taxes:
- Stop – Scammers use people’s anxieties about taxes against them. They count on you taking action without looking too closely, so don’t immediately respond.
- Scrutinize – Look closely at the communication and scrutinize what you see. A good resource for this is Taxpayer Advocate from the IRS. You can also contact your state’s Taxpayer Advocate services – find yours here.
- Take Action – If you believe you’ve been targeted for a scam, report it to your law enforcement’s non-emergency number or the FTC.
Signs of an imposter scam
Be on the lookout for scams on the phone, online, through email or mail, as well as in person or at a business. Here are some red flags, from the Consumer Finance Protection Bureau:
- Sweepstakes – Someone tells you you’ve won a sweepstakes that you didn’t enter
- Asking for Payment – Someone tells you to pay taxes or fees upfront
- Urgency – Someone pressures you to take action, such as making a payment or giving personal information, immediately
- Government Official – A fake government official contacts you to confirm your winnings
- Threats – The IRS says they have seen a surge of phone scams where fake IRS agents threaten arrest, deportation, and license revocation.
Choose a trustworthy tax preparer
You’re trusting your tax preparer not only with a lot of personal information, but also to accurately represent you to the IRS. Most tax professionals are ethical and provide high-quality services, but be on the lookout for scams and identity theft. Watch out for tax preparers who:
- Promise very large tax refunds
- Ask you to sign a blank return
- Tell you how much of a refund you’ll get before looking at your records
- Charge fees based on a percentage of the refund
Filing taxes can be stressful, so make sure your preparer is truly on your side and is not taking risks with your financial future.
Can you file for free?
Start by determining whether you’re eligible for free tax preparation. If you are, this is most likely your best choice because the volunteers are trained to help you find all of the tax credits and exemptions that you are eligible to claim.
If you want to do your taxes on your own, see if you’re eligible for Free File, which allows you to use brand-name software for free. 70% of tax payers are eligible to use Free File. Why pay to file your taxes when you use the exact same software for free?