In 2019, return preparer fraud was one of the 12 most common tax scams.[1] Digitization has made tax preparation easier, but has also opened up a whole new world of criminal activity. While there’s not much we can do to stop these threats entirely, there are certainly ways that we can all be smarter and more cautious. Taxpayers are more likely to fall victim to scams during tax time, so find out how to help prevent theft this tax season.
Look Out for Suspicious Emails
Phishing is a scam where criminals attempt to trick you into giving out your personal information by impersonating businesses or government agencies through email. During tax season, beware of emails that appear to be from the IRS asking you to click on links or provide personal information. These links can install malware on your computer or phone, and your personal information could end up in the wrong hands. It may be that Jeff Bezos’ iPhone was hacked this way. Keep in mind that a phishing email might look like it’s from the IRS, but the IRS doesn’t contact taxpayers through email. Also beware of emails that include a time limit on when you need to take action before a negative consequence happens. For instance, you may receive an email from someone claiming to be the IRS saying you owe money and it’s due by the end of the day or you’ll face a hefty penalty. These scams might ask for your personal information or ask you to sign into an online account by clicking on a suspicious link.
Question Higher-Than-Expected Refund Claims
Most tax preparers aren’t criminals, but there have been instances of preparers encouraging taxpayers to claim improper tax credits or deductions. Some offer free money in the form of an inflated tax refund. They often focus on refundable tax credits like the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC). Congress has delayed issuing these tax refunds for this reason. Taxpayers who falsely claim these deductions or receive a fraudulent refund can be subject to jail time or a penalty.
Watch Out for Fake Charities
You may be able to deduct charitable contribution from your taxes, but be wary when making a donation. Fake charities exist, and they can try to steal your money and your identity. Make sure to research any charity you donate to first to make sure they are legitimate. Be on the lookout for charities with names that are similar to well-known organizations. Also keep in mind that real charities don’t ask for your personal information such as your Social Security number or passwords when you make a donation.
Identity theft can pose a major threat to your financial wellbeing. That’s why it’s important to be on the lookout for scams, especially during tax season. In a digital world, a face-to-face meeting is important when making crucial decisions about your financial future. At O’Donnell Financial Group, we offer complimentary financial reviews so that we can meet with you to learn more about your retirement planning needs. Click here to schedule your no cost, no obligation review with us.
