Beware Stimulus and Tax Scams

It’s stimulus season and tax season at once, and scammers couldn’t be happier. They know that taxpayers are eager to get their hands on their stimulus payments and tax refunds. As consumers are working to file their taxes before the May 17 deadline, all that paperwork and payments mean people may be letting their guard down. For a scammer, nothing could be better!

The IRS is warning of a surge in scams as the tax agency continues processing tax returns and distributing stimulus payments to eligible adults who have not yet received them. Here’s all you need to know about the latest round of stimulus and tax scams:

How the scams play out

In the most recent IRS-related scams, scammers will con victims into filing phony tax returns, steal tax refunds or stimulus payments or impersonate the IRS to get victims to sign documents or share personal information, such as Social Security numbers or checking account numbers. The scams are pulled off via email, text message or phone. Sometimes, victims will be directed to another (bogus) website where their device will be infected with malware. Other times, the victim receives a 1099-G tax form for unemployment benefits they never claimed or received, because someone has filed for unemployment under their name. Unfortunately, the losses incurred through most of these scams can be difficult or impossible to recover.

What you need to know

As always, information is your best protection against these scams. Here’s what you need to know about the IRS, the stimulus payments and tax returns:

The IRS will never initiate contact by phone or email. If there is an issue with your taxes or stimulus payment, the agency will first communicate via mail.
There is no “processing fee” you need to pay before you can receive your stimulus payment or tax refund.
The IRS is not sending out text messages about the stimulus payments. If you receive a text message claiming you have a pending stimulus payment, it’s from a scammer.

There is no need to take any action to receive your stimulus payment. Likewise, aside from filing your tax return, there is nothing additional you need to do to receive your tax refund.

If you’ve been targeted

If you receive a suspicious phone call, text message or email that has allegedly been sent by the IRS, do not engage with the scammer. Block the number on your phone and mark the email as spam.

If you are a victim

If you are the victim of identity theft related to taxes or stimulus payments, there are steps you can take to mitigate the loss.

If you received a 1099-G for unemployment benefits you’ve never filed for or received, it’s best not to ignore it. Contact your state’s unemployment office to report the fraud. It should be able to send you a corrected 1099-G showing you did not get any benefits.

First, report the scam to the correct authorities. If a fraudulent tax return was filed in your name, the IRS will mail you a Letter 4883C or 6330C to verify your identity. You may also need to call the toll-free number provided on the letter and visit an IRS Taxpayer Assistance Center . After reporting the fraud, you’ll likely need to file a paper tax return. Complete an Identity Theft Affidavit (Form 14039) and attach it to the back of your paper return.

If you’ve mistakenly shared your information with a scammer and they’ve stolen your stimulus check, you will likewise need to let the IRS know. Visit Identitytheft.gov where you will receive a personal recovery plan that will hopefully minimize the damage done by the scammer and help you reclaim your lost funds.

It’s tax season and stimulus season, so it’s also scam season! Keep your guard up and follow the tips outlined here to prevent yourself from falling victim to one of the many circulating scams. Stay safe!

Your Turn: Have you been targeted by a stimulus or tax scam? Tell us about it in the comments.

Learn More:
wfmz.com
freep.com
cnbc.com
irs.gov

If You Hear This, You’re Talking to a Tax Scammer

It’s tax season, and scammers are working overtime to get your money. Tax scams are as varied as they are common, but when you know what to look for, you can beat fraudsters at their game and keep them from getting your money and your information.

If you hear or see any of the following 12 lines this tax season, you know you’re dealing with a scammer:

1. “We’re calling from the IRS to inform you that your identity has been stolen and you need to buy gift cards to fix it.”

If your identity has indeed been stolen, no amount of purchased gift cards will get it back. Unfortunately, there is also no way to reclaim funds that are lost through this kind of scam.

2. “You owe tax money. We’ll have to arrest you, unless you purchase iTunes gift cards.”

Yes, this really happened. A 20-year-old college student was tricked into putting $500 onto three separate iTunes cards and $262 on a fourth, when she received a call from an “IRS agent,” USA Today reports. As unbelievable as it sounds, when threatened with arrest, people will believe or do almost anything.

In this ruse, the scammer will make sure to get the access numbers of the iTunes card, which gives them easy and untraceable access to cash.

3. “If you don’t pay your tax bill now, we’ll cancel your Social Security number.”

Your Social Security number cannot be canceled, suspended, frozen or blocked.

“If taxpayers receive a call threatening to suspend their SSN for an unpaid tax bill, they should just hang up,” the IRS says.

4. “We’re calling you about a tax bill you’ve never heard about before.”

The IRS will never initiate contact about an overdue tax bill by phone; they will first reach out by mail.

5.  “This is the Bureau of Tax Enforcement. We’re putting a lien or levy on your assets.”

The Bureau of Tax Enforcement does not exist. If you receive a call from this, or a similar bogus agency, hang up.

6. “This is a pre-recorded message from the IRS. If you don’t call us back, you’ll be arrested.”

The IRS does not leave pre-recorded voicemails, especially those claiming to be urgent and/or threatening.

7. “You must make an immediate payment over the phone, using our chosen method.”

The IRS says that its agents will never call to demand immediate payment using a specific payment method, such as a prepaid debit card, gift card or wire transfer. If you hear this, you’ll know you’re talking to a scammer.

8. “Click here for more details about your tax refund.”

The IRS will never send emails with information about tax refunds. Emails worded like this will lead the victim to an IRS-lookalike site that is actually created by scammers. Clicking on the link will load the victim’s device with malware.

9. “We represent the Taxpayer Advocate Service and we need some information.”

Although the Taxpayer Advocate Service (TAS) is a legitimate organization within the IRS to assist taxpayers, representatives of the TAS don’t call individuals out of the blue. The TAS also will not ask taxpayers to share sensitive information, such as their Social Security number, over the phone.

10. “You owe the federal student tax.”

The federal student tax is yet another invention of tireless scammers. It does not exist, and if you receive a call about it, you’re being targeted by a scammer.

11. “This is an SMS/social media post from the IRS. We need more information.

The IRS doesn’t initiate contact with taxpayers, or ask for sensitive information, via text message or social media.

12. “We don’t need to sign your tax return even though we prepared it.”

A legitimate tax preparer must sign your tax return and will have a valid Preparer Tax Identification Number (PTIN). If a tax preparer is reluctant to sign yours, or to share their PTIN, you are likely dealing with a scammer.

If you’ve been targeted by any of these tax scams, you can fight back by reporting the scam to the proper authorities. Phishing emails that appear to be from the IRS can be forwarded to phishing@irs.gov. Alert the FTC about IRS phone scams and report Social Security Administration phone impostor scams on the Social Security Administration’s website.

Stay alert during tax season and keep your money and your information safe!

Have you been targeted by a tax scam? Share your experience in the comments.

Learn More:
clark.com
nerdwallet.com
mybanktracker.com
irs.gov

IRS Reveals List of Dirty Dozen Tax Scams for 2020

Each year, the IRS publishes the “Dirty Dozen,” a list of tax scams most prevalent during that year’s tax season. This year, with COVID-19 pushing off the federal tax deadline to July 15, the IRS held off publishing the list until early July, and of course it’s loaded with COVID-19-related scams.SeptFeatured2020_tax-scam

Whether you’ve filed for an extension, you’ve had your taxes filed for months or you’ve gotten them in just in time at the mid-July deadline, be on the lookout for the Dirty Dozen of 2020, which continues spreading for months after Tax Day.

1. Phishing: Fake emails or websites impersonate the IRS in an attempt to steal information about refunds or Economic Impact Payments (EIPs).

Protect yourself: The IRS will never initiate contact with taxpayers via email. Be extra wary of any websites and emails making heavy use of COVID-19 terms like stimulus, coronavirus and Economic Impact Payment.

2. Fake charities: Criminals exploit the fear and uncertainty surrounding the pandemic to set up bogus charities that rob innocent victims who believe they’re helping the unfortunate. The “charity” may even claim to be working on behalf of the IRS to help victims of the virus get their tax refunds.

Protect yourself: Charities with familiar-sounding names that aggressively market themselves are often bogus charities trying to make donors believe they represent the actual well-known organization. They will also refuse to provide an Employer Identification Number (EIN) when asked, and will not have a positive review on sites like Charity.org. Taxpayers can also search for legitimate charities using the IRS charity search tool.

3. Threatening impersonator phone calls: An alleged IRS agent threatens the victim with arrest, deportation or license revocation if taxes are not paid immediately by prepaid gift card or wire transfer.

Protect yourself: The IRS will never threaten a taxpayer or demand immediate payment over the phone. It also will not insist on being paid via gift card or wire transfer.

4. Social media scams: Scammers use information that can be found on social media platforms for a variety of scams, including the impersonation of the victim’s friend to get at the victims’ more private information. This ruse often ends in tax-related identity theft.

Protect yourself: The victim’s “friend” will claim to be in a compromised position and to urgently need the victim’s personal information. When contacted privately, though, the “friend” will have no knowledge of the interaction.

5. EIP or refund theft: Scammers steal taxpayers’ identities, file false tax returns in their names and pocket their refunds and their EIPs.

Protect yourself: Personal information should never be shared online with an unverified contact, even if the contact promises to assist in tax filing or receiving the EIP.

6. Senior fraud: Scammers, or long-term caregivers of the elderly, file tax returns on their behalf and then pocket the refunds and EIPs.

Protect yourself: Seniors should be wary of bogus emails, text messages and fake websites asking them to share their personal information.

7. Scams targeting non-English speakers: Scammers impersonate IRS agents and target non-English speakers, threatening jail time, deportation or revocation of the victim’s driver’s license if an immediate tax payment is not made. The victims have limited access to information and often fall for these scams.

Protect yourself: The IRS will not threaten taxpayers over the phone or insist upon immediate payment.

8. Unscrupulous return preparers: Alleged tax preparers will reach out to the victim and offer their services. Unfortunately, though, they will steal the victim’s personal information, file a tax return on their behalf and pocket the refund, or promise inflated refunds for a bigger fee.

Protect yourself: If a tax preparer is not willing to share their preparer Tax Identification Number (TIN), they are likely to be a scammer. Also, if the alleged preparer promises credits and deductions that sound too good to be true, they probably are.

9. Offer in Compromise scams: Bogus tax debt resolution companies make false claims about settling tax debts for “pennies on the dollar” through an Offer in Compromise (OIC) in exchange for a steep fee.

Protect yourself: An OIC that sounds outrageously attractive is likely bogus. Taxpayers can use the IRS’s OIC tool to see if they qualify for an authentic offer.

10. Fake payments with repayment demands: A scammer steals a taxpayer’s personal information, files a fake tax return on their behalf and has the refund deposited into the taxpayer’s checking account. The scammer then calls the victim impersonating the IRS and claiming the refund was mistakenly inflated, so the victim must return the extra funds via gift card or wire transfer. Of course, this money will go directly into the scammer’s pockets.

Protect yourself: Refund checks will never be deposited in a taxpayer’s account if they have not filed taxes. Also, the IRS does not demand payment by a specific method.

11. Payroll and HR scams: Scams target tax professionals, employers and taxpayers to steal W-2s and other tax information. They will then impersonate the employee and request to change their direct deposit information for their paychecks.

Protect yourself: If an employer or HR representative receives a request for a direct deposit change, it’s best to check with the employee directly to see if the request is legitimate.

12. Ransomware: Malware infects a victim’s computer, network or server, and tracks keystrokes and/or other computer activity. Sensitive data is then encrypted and locked. When the victim tries to access their data, they’ll receive a pop-up message demanding a ransom payment for the return of their information.

Protect yourself: Links embedded in emails from unverified sources should never be opened. Tax software should not be downloaded unless it features multi-factor authentication.

Don’t be a victim of the dirty dozen! Stay alert and stay safe.

Your Turn: Have you been victimized by a tax scam? Tell us about it in the comments.

Learn More:
irs.gov
abcnews4.com

 

 

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!