From Black Voices — As you get ready to file taxes for this year, make sure that you do it right. The worst group in America to mess with is the IRS. They have unprecedented power to pursue those in violation of their regulations and can make your life miserable if they catch you breaking the law. Many tax payers are not aware that there are quite a few businesses that take advantage of unwitting tax payers every year at tax time. So, to prepare for this problem, we have put together a list of the top ten tax scams that you should watch out for if some other party prepares your taxes.
Tax Scam #1: Bad tax preparers — Some tax preparation services will charge you higher fees than you should expect to pay, and may even take a percentage of your tax refund. Also, in order to get your business, some companies will promise returns that are too good to be true. Watch out for deals that don’t seem to make sense, and try to work with a company that has a good reputation.
Tax Scam #2: Hiding money in off-shore accounts –If your banker or tax preparation person tries to persuade you to do anything that hides your money from the IRS, don’t do it. The IRS is making more efforts every year to chase down money around the world, and the penalties are getting quite severe.
Tax Scam #3: Phishing — There are companies out there who will try to suck you in by promising you a large refund in an email, fax or even a phone call. They then get you to release personal information so they can steal your identity. If you get one of these emails, do not reply or click on anything.
Tax Scam #4: Filing false or misleading forms — There are some who believe that the IRS keeps secret accounts that you can access by filing special forms. This is not true. Scammers use these “forms” to convince victims that they have access to refunds they would not otherwise be entitled to.
Tax Scam #5: Non-taxable social security benefits with exaggerated withholding — Some people turn in tax forms with non-taxable income and inaccurate withholding amounts believing they can get the wrongly claimed withholding amounts refunded. This should not be done, since the IRS can charge you thousands for this kind of mistake.
Tax Scam #6: Abuse of charitable withholdings and deductions — The temptation of your tax preparer might be to inflate the amount of your charitable donations to get a bigger refund. Be careful, because this can cost you big if you are audited.