We know you don’t have to worry about your income tax preparation and tax filing until next year, but be aware of these common tax scams so you don’t fall victim in the future. If you let a tax scam promoter pull you into one of their schemes, you will have to repay the unpaid taxes plus interest fees and penalties.
Hiding income offshore. Even if you’re just using offshore debit cards, credit cards, wire transfers or insurance plans, these could count for abusive offshort transactions in the eyes of the IRS. Make sure you check with your tax preparer to ensure you’re staying legal before engaging in anything financial offshore.
Identity theft and phishing. Aside from the hassle of dealing with an identity theft (when someone uses your name, social security number, credit card info and more to commit fraud or other crimes), a criminal could also file a fraudulent tax return and collect a refund. Be aware of phishing scams too – sometimes fraudsters will send emails that look like they’re from the IRS and ask for personal information. Keep your personal information safe!
Return preparer fraud. Make sure you use a reputable tax return preparer or tax service to ensure your tax return is free of errors and illegal maneuvers. Fraudsters derive benefit by skimming a portion of their clients’ refunds, charging inflated fees for return preparation services and attracting new clients by making false promises.
Abuse of charitable organizations and deductions. The IRS continues to observe the misuse of tax-exempt organizations, such as creating an arrangment to shield income by donating an asset or part of your income and then getting it back by repurchasing it later on. Also make sure you’re deducting the proper amounts from monetary charitable donations – your tax preparer can help you with that.
Avoiding these scams now will sure make income tax preparation through your tax service easier next year!