Beware of Popular Tax Scams

Get ready for tax season!

What appears cheap can end up being very expensive. Make sure your tax advisor is someone you trust professionally. Taxpayers could face heavy fines and even imprisonment for filling faulty tax returns.“Here is a list of the “dirty dozen” tax scams which the IRS urges you to avoid:

1) Offshore transactions
Use of an offshore account, trust, or other arrangement to hide income or claim false deductions is illegal.

2) Identity theft
Beware of any suspicious letter from a bank requesting you to verify personal information in relation to your taxes. It may be a trick to try to defraud you and steal your identity.

3) Phony tax payment checks
Con artists will try to sell false checks to use to make your tax payment. These checks have no financial value and are worthless.

4) Slavery Reparation Credit
There is no such credit due to African-American taxpayers as reparations for slavery. Beware of anyone offering to prepare your taxes who offers to file this credit for an additional fee. The IRS reports that this was the #1 scam of 2002.
5) No taxes withheld from wages
It is illegal to ask your employer not to withhold federal income tax from your wages. This scheme is based on an invalid interpretation of tax laws.
6) Improper home-based business
You cannot deduct personal expenses and try to pass them off as business related expenses by setting up a “bogus” home-based business.

7) You’ve won a prize!
But you have to pay the taxes first — a caller will inform you that you’ve won a fabulous prize, but in order to claim it you must pay the income tax due on the prize’s value. Baloney! Any taxes due for winning a prize are payable to the IRS, not the company or person offering the prize.

8) The Secret That Lets You Not Pay Taxes, only $49.95
There is no secret way not to pay taxes. The U.S. courts have shown such arguments to be frivolous no matter what you’ve heard about taxes being “voluntary”.

9) Social Security tax scheme
In this scam someone will offer to get you a refund of your Social Security taxes or overpayment for a fee and a percentage of the refund. There is no such thing as overpayment of social security taxes or a refund due to taxpayers.

10) Bigger refund for a fee
Don’t believe anyone who offers to help you get a bigger refund, especially without knowledge of your tax situation.

11) Sharing or borrowing earned income tax credit (EITC)
It is illegal to split or share legitimate EITC in order to get the maximum credit allowed.

12) Home collection of taxes due
Beware of anyone claiming to be an “agent” of the IRS and visiting your home to collect your tax payment. A legitimate agent of the IRS will carry a picture ID and normally call before any such visit. Also the IRS does not go door to door to collect payments.”

Source: http://www.collegecentral.com

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