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Taxes and Fraud: The Intersection of Knowledge and Caution

Navigating tax season can be daunting and feel full of complexities. When figuring out taxes, it’s important to look out for scams and make sure your filings are accurate. Scammers often target students, figuring they are less experienced and may not have knowledge about what to look for. During tax season, it’s important to be informed of the types of fraud that are out there.

Tax Scams

Some of the most common tax scams that occur are phishing emails and phone calls where a scammer attempts to initiate conversations posing as an IRS agent, often asking for confidential information. Another common scam is fake refund schemes where a scammer makes a promise of an excessive refund in exchange for an upfront fee. In addition, fraudsters will commit identity theft to file false tax returns and claim refunds on that person’s behalf. Another popular scam during tax season is fraudulent tax preparers. In this case, scammers get individuals to agree to allow them to complete their taxes by promising large returns.

Tax Fraud

Tax fraud happens when individuals provide false information on their tax returns to avoid paying the actual amount of taxes owed. This can be done both intentionally and unintentionally. It can include underreporting income or increasing or claiming deductions and credits they don’t qualify for. Tax fraud is a serious offense. Depending on the severity of tax fraud committed, it can result in legal and financial consequences.

Important Things to Know

It’s important to educate yourself on current tax laws to avoid unintentional tax fraud and popular tax scams to look out for. Research education credits like the American opportunity tax credit or the lifetime learning credit to see if you qualify. Verify any communication you receive from the IRS. Generally, the IRS communicates through traditional mail not random phone calls or emails. Use reputable tax preparers or tax software to file your returns and always check the reviews beforehand to ensure it’s a safe way to file. If the return seems far larger than you were expecting, there is reason to be suspicious. Be accurate in your reporting of information and keep records of all tax filings.

Navigating tax season doesn’t have to be difficult, but it does take time and caution. The first line of defense in avoiding any fraud or scam is education. Whether it’s avoiding a phishing attempt, understanding tax credits or ensuring correct reporting of your income, answers are available through research. Set aside time to organize your important tax documents so they’re readily available when you need them. Stay educated, empowered and know when to contact a professional for tax help.

Sources:

https://finance.yahoo.com/news/7-ways-accidentally-committing-tax-000211596.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAIt3riT8IEenz9IPIRwvIhU_M87AHd5BPcZAf1qqDPsSI6NV3SvP2z66stWzLAsZ7YNJ400qcHfXcD2MkozeDrfQViu_c1ZqneoeJDzREMq-b8ufoN6FG8F4HS5RWMJs43mL1DL6LshlfLiQR7ABFe9br_eHtmWmYl1OX4MV74Fw#:~:text=In%20fact%2C%20you%20might%20end,Who%20Pays%20More%20in%20Taxes%3F

https://www.irs.gov/credits-deductions/individuals/aotc#:~:text=The%20American%20opportunity%20tax%20credit,of%20%242%2C500%20per%20eligible%20studen

https://www.irs.gov/credits-deductions/individuals/llc

https://www.irs.gov/newsroom/tax-scamsconsumer-alerts