Now that tax season is underway, there are plenty of unscrupulous types hoping to get their hands on your hard-earned cash. As you prepare your taxes (or have someone else prepare them for you), it’s important to be aware of the problems that could arise. Here are three tax refund scams to watch out for:
1. Preparer Charges a Percentage of Your Refund
Most reputable tax professionals charge a flat fee to prepare your return. I use an accountant to prepare my business return and my personal return. The costs are based on how many Forms and Schedules are filed, along with what type of return it is.
2. You’re Told to Apply for Grants through Your Tax Return
One of the biggest scams out there is to tell consumers that they are eligible for grants through their tax returns. Some fraudsters claim that they will increase your tax refund by helping you apply for grants that are available through your tax return.
Fraudsters claim that you are eligible for special education grants, grants based on your age, or some other quality. In some cases, scammers claim that you have to claim Medicare or Medicaid benefits, or even Social Security benefits, through your tax return. They talk about “special programs” and “extra” money.
The reality, though, is that none of these programs can be accessed through your tax return. You don’t apply for grants or benefits when filing your taxes (although your return might be used in some cases to help determine your eligibility for certain programs and benefits).
Anyone who charges you to help you apply for a “special program” with your tax return is likely a scammer trying to take your cash.
3. Someone Claiming Credits in Your Name
Another tax refund scam to watch out for is when someone claims credits in your name. Using your personal information, a fraudster might claim credits in your name. They receive a big refund, and you are left wondering what happened. You need to be on alert for this scam, since it can mean that you don’t get your refund — and it could be a sign that your personal information is out there and available for use in other scams and identity fraud issues.
If someone has claimed your refund, you need to let the IRS know as soon as possible, and work to get the situation rectified.
Be on the alert for tax refund scams. If it seems too good to be true it probably is, and you also need to be vigilant about your personal information and watch for red flags that it has been stolen.