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How To Safeguard Against Tax Scams

by Neal Frankle, CFP ®, The article represents the author's opinion. This post may contain affiliate links. Please read our disclosure for more info.

Take extra precautions when you prepare your tax return this year. That’s because more and more schemers are out there trying to steal your money and/or private information (so they can steal even more of your money). According to the IRS here are the top 4 tricks thieves use to rip off nice people like you:

Bogus Returns

Your tax return is like cheese to a rat for criminals. It has all the information they need to rob you blind and is the number one threat you need to guard against. Sometimes the slime buckets file fraudulent returns and claim bogus refunds in your name. Of course they change the address so they receive the money and leave you to clean up their mess. The bad guys love this tactic because it can take months before you discover what’s going on. By then they’ll be long gone of course.

Phishing

The worms that use this technique pretend to be the IRS and ask you “to confirm” private financial information. They do this in order to steal your identity and open up new accounts under your name.

If someone fishy contacts you and pretends to be part of the IRS, send an email to the real Mc Coy at phishing@irs.gov Keep in mind that the IRS doesn’t ever call, text or email taxpayers in order to obtain private data. They have all the information they need on you already.

Your Tax Preparer

Most people are honest – and that applies to CPAs and other tax prep professionals as well. But there are some bad apples in the barrel. If you happen to hire the wrong tax preparer, beware. They have access to all your information and they can perpetrate identity theft or bogus tax preparation. It’s happened before.

One good safety measure is to make sure your professional signs his or her name as the person who actually created the return. While you’re at it, make sure they enter their IRS Preparer Tax ID Number (PTINs).

Another important safety measure is to carefully review your return. Compare this year’s return to previous returns. If something looks funny, it might not be something to laugh about. Ask questions until you are satisfied and if not, get another opinion and/or call the IRS to report the problem.

Free Money Ploy

Some pilferers troll for low-income taxpayers who don’t usually have to file a return. They try to coax people into filing a return in order to get a refund that doesn’t exist. Their goal is to charge unsuspecting people for bad and worthless advice that won’t provide that free money.

Sometimes the robbers go one step further. They suggest that taxpayers file fictitious returns in order to get refunds, rebates or tax credits. This is illegal of course but the people who sell the bad advice won’t be sent up the river – you will.

What To Do To Safeguard Your Tax Return

The IRS has a special unit to help people who think they’ve been scammed. This IRS team is supposed to help protect your IRS file. I hope you never have to find out if they are good at their jobs or not but at least you have this resource.

Consider using a credit protection service. If you do, they’ll contact you anytime anyone tries to open a credit account using your name. Also, any business that offers credit to someone using your name will have to contact you before the business extends the credit.

Don’t disclose financial details such as your Social Security number, date of birth, etc. unless you are absolutely sure the site is safe.

Invest in a shredder. Don’t just throw away documents that contain sensitive personal data.

If you have a trusted professional tax or financial advisor check with them before you release information or get involved with a tax deal that looks screwy. The deal with lots of people and have more experience. They can probably spot a trickster far easier than you because they likely come across issues like this daily.

I wish I didn’t have to write about issues like these and I’m thankful that I don’t know anyone who’s been the victim of tax fraud. But I know it’s a huge problem. Hopefully you can use some of these techniques to make sure you don’t become a victim.

What do you do to make sure you don’t become a victim of tax fraud? Has this ever happened to you or someone you know? What was the result?

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Who is Neal Frankle

Neal Frankle

I'm a CERTIFIED FINANCIAL PLANNER™ Professional with more than 25 years of experience. I feel very blessed and hope to share my personal financial experience and professional wisdom with readers of WealthPilgrim.
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Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement.  We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement. We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

YouTube Video UCoU0buhwVplzXrsyf342nOg

Retirement Crusaders

June 10, 2022 12:19 PM

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Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement.  We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement. We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

YouTube Video UCoU0buhwVplzXrsyf342nOg

Retirement Crusaders

June 10, 2022 12:19 PM

Subscribe
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