5 Common Tax Mistakes To Avoid

  1. Young couple sit in modern kitchen express dismay and worry over proper way to fill out paperworkFaulty Math – A small miscalculation can throw off all your numbers and get you into trouble with the IRS.
  2. Name Changes and Misspellings – If you’ve recently changed your legal name, let the Social Security Administration know.
  3. Omitting Extra Income – If you’ve taken any side jobs during the year, fill out a 1099-MISC and file it along with your taxes.
  4. Recent Tax Law Changes – When preparing your taxes, be sure to file according to the most recent laws.
  5. Signing Your Forms – If filing the old-fashioned way, put your signature wherever required. If filing online, you can use a PIN instead.

Your Turn:
Know of any other commonly made mistakes when it comes to filing taxes? We’d love to hear about it!

Tax Scams 2019

Each year, the IRS publishes the “Dirty Dozen,” a list of 12 scams that are rampant during that year’s tax season.

This year, the IRS is cautioning taxpayers to be extra vigilant because of a 60% increase in email phishing scams over the past year. This is particularly disheartening, since it comes on the heels of a steady decline in phishing scams over the previous three years.

Typically, an email phishing scam will appear to be from the IRS. Once the victim has opened the email, the scammer will use one of several methods to get at the victim’s personal information, including their financial data, tax details, usernames and passwords. They will then use this information to steal the victim’s identity, empty their accounts or file taxes in the victim’s name and then make off with their refund.

Scammers have several means for fooling victims into handing over their sensitive information. The most popular tax-related phishing scams include the following:

  • Tax transcript scams
    In these scams, victims are conned into opening emails appearing to be from the IRS with important information about their taxes. Unfortunately, these emails are bogus and contain malware.
  • Threatening emails
    Also appearing to be from the IRS, these phony emails will have subject lines like “IRS Important Notice” and will demand immediate payment for unpaid back taxes. When the victim clicks on the embedded link, their device will be infected with malware.
  • Refund rebound
    In this scam, a crook posing as an IRS agent will email a taxpayer and claim the taxpayer was erroneously awarded too large a tax refund. The scammer will demand the immediate return of some of the money via prepaid debit card or wire transfer. Of course, there was no mistake with the victim’s tax refund and any money the victim forwards will be used to line the scammer’s pockets.
  • Phony phone call
    In this highly prevalent scam, a caller spoofs the IRS’s toll-free number and calls a victim, claiming they owe thousands of dollars in back taxes. Those taxes, they are told, must be paid immediately under threat of arrest, deportation or driver’s-license suspension. Obviously, this too is a fraud and the victim is completely innocent.

If you’re targeted
When targeted by any scam, it’s crucial to not engage with the scammer. If your Caller ID announces that the IRS is on the phone, don’t pick up! Even answering the call to tell the scammer to get lost can be enough to mark you as an easy target for future scams. If you accidentally picked up the phone, hang up as quickly as possible.

Similarly, suspicious-looking emails about tax information should not be opened. Mark any bogus tax-related emails that land in your inbox as spam to keep the scammers from trying again.

If you’re targeted by a tax scam, report the incident to help the authorities crack down on these crooks. Forward suspicious tax-related emails to phishing@irs.gov. You can also alert the Federal Trade Commission at FTC.gov.

Protect yourself from tax scams
Stay one step ahead of scammers this tax season by being proactive. Protect yourself with these steps:

File early in the season so scammers have less time to steal your identity, file on your behalf and collect your refund.
Use the strongest security settings for your computer and update them whenever possible.
Use unique and strong passwords for your accounts and credit or debit cards.
Choose two-step authentication when conducting financial transactions online.

Remember, the IRS will never:
Call about taxes owed without having first sent you a bill via snail mail.
Call to demand immediate payment over the phone.
Threaten to have you arrested or deported for failing to pay your taxes.
Require you to use a specific payment method for your taxes.

Ask you to share sensitive information, like a debit card number or checking account number, over the phone.

Be alert and be careful this tax season and those scammers won’t stand a chance!

Your Turn:
Have you ever been targeted by a tax scam? Share your experience with us in the comments.

SOURCES:
https://clark.com/personal-finance-credit/taxes/beware-of-these-common-irs-scams/

https://www.google.com/amp/s/www.forbes.com/sites/kellyphillipserb/2018/12/04/irs-warns-on-surge-of-new-email-phishing-scams/amp/

https://www.businessinsider.com/irs-phone-scam-what-to-do-if-you-get-scam-call-2018-2

Don’t Panic: Filing Taxes As A College Student

forms, pen and calculator on deskImagine skipping a day of class, then coming into the next session and seeing a test. You open the packet and see what appears to be gibberish staring back at you. Everyone else around you seems to have a perfect grasp of what’s going on, but you’re just stumbling in the dark.

That can be what the process of preparing your taxes can feel like the first time you do them. You’re given a big pile of paper and expected to sort it out yourself. It’s easy to get overwhelmed.

Before you start to panic, though, take a deep breath. There are a few questions that might make your life much easier. Grab that big stack of paper and ask yourself …

1.) Do I even have to file?
There’s an easy way to short circuit this whole process. If you didn’t make much money last year, you don’t have to file taxes. If your earned income (wages and tips) is less than $6,300 and your unearned income (interest and dividends) is less than $1,050, you probably don’t have to file taxes.

Of course, you might still want to do so. If you had a summer job, your employer took taxes out of your paycheck as though you’d been working all year. You might be able to get a little bit of a refund for your effort.

2.) How hard does this have to be?
If your tax situation is relatively simple, you may be eligible to use a form called the 1040-EZ (as in easy). It’s a much more straightforward document. You just enter your wages, your filing status (married or single) and the taxes you’ve already paid. It’s all laid out on your W-2, the form you got in the mail or online from your employer.

The 1040-EZ lives up to its name. It’s one page long. Once you put your name, address and Social Security number on it, you’re about halfway done. You don’t get to claim any tax credits, but there aren’t a lot of tax credits available for college students in any case.

3.) Where can I get help?
You don’t have to go it alone. If you’re feeling antisocial, you can (and should) use an e-filing service. The IRS has a tool to help you pick the best one. It’s available here: https://apps.irs.gov/app/freeFile/jsp/wizard.jsp?ck.
There may also be tax help available. A program called the Volunteer Income Tax Assistance (VITA) is available on many college campuses. Business students looking to bolster their resumes will frequently volunteer to help with taxes for free. This is especially important if your tax situation is more complicated, like if you’re paying for college on your own or have self-employment income from a side hustle.

Your Turn:
Are you stressed about taxes? Tell us about it in the comments, or pop down and help your fellow students out!

Sources:
https://www.irs.gov/individuals/free-tax-return-preparation-for-you-by-volunteers
http://blog.taxact.com/1040-tax-forms/
http://www.nolo.com/legal-encyclopedia/when-does-your-child-have-file-tax-return.html

Tax Resources for the New Year

With the coming of the new year,tax forms it’s also time to start thinking about this year’s tax return. April will be here before you know it, so it’s good to start planning now.

By the end of January, you should have received everything you need to file your return. Obviously if you’re getting a refund, it’s best to file as soon as you can to get your refund back sooner. Even if you owe money, it may be best to simply file and get it over with so that you aren’t worried about it longer than necessary.

Something that AOFCU has always tried to do is be a good value for our members. In that vein, we’ve partnered with the good folks over at Love My Credit Union to offer you some great tax service discounts, just for being our member. One of these is a discount on Turbo Tax, or, if you prefer to sit with a tax preparer,  a coupon for use at Jackson Hewitt. Turbo Tax is also running a sweepstakes this year, so who knows, maybe paying your taxes early really pays off!

Check out the full details by clicking here!