Finishing your tax return is a great feeling. But even once
you've gotten your taxes done, you still need to be on the
lookout for criminals seeking to take advantage of you. If you're
not careful, you could find yourself in big trouble with the
Every year, the IRS makes a list of the most common tax scams
of the year. Here are seven of the worst traps you could fall
into for 2013.
1. Identity theft.
The most common tax scam involves stealing your name, Social
Security number, and other personal information and then using
them to file a fake tax return and try to have your tax refund
diverted to the criminal. Last year, the IRS managed to intercept
$20 billion in identity theft-related attacks
they struck, but even with enhanced systems to intercept fraud,
the IRS advises you to take care of your identifying information
to avoid potential problems.
Learning more about tax identity theft is easy. The IRS has
set up a website with specific identity-theft tips, including
what to do if you think someone has stolen your identity and
suggestions on how you can prevent identity theft from happening.
Click here to learn more from the IRS.
2. Return-preparer fraud.
The majority of taxpayers get help from tax professionals.
has prepared an average of 10 million tax returns annually since
its founding in 1955 and claims to prepare one in every seven tax
returns, but millions of taxpayers use independent individual
preparers for help.
While most preparers are legitimate, some take advantage of
their position to run tax scams. Be sure your preparer signs your
return and provides a Preparer Tax Identification Number. For
more tips on picking a tax professional, take a look at this IRS
3. Hiding income overseas.
Many individuals try to avoid paying the IRS its due by keeping
money outside the U.S. in foreign banks and financial
institutions. But new requirements to report such accounts makes
hiding money a lot more difficult, and the IRS has worked closely
with foreign financial companies to root out tax fraud.
It's important to understand that
legitimate foreign operations
. Tech giants
hold huge amounts of cash that they earned outside the U.S. in
overseas accounts, and until they repatriate it, it's completely
legal for them not to pay taxes. Most individuals, though, have
no justification for not reporting foreign income under the tax
4. Fake Social Security refunds.
Many con artists target the elderly with promises of Social
Security refunds or rebates, offering to help them claim
nonexistent money from the IRS in an effort to obtain personal
information. As appealing as it can sound to get a refund back,
most of these promises are patently false. If you don't know
someone who approaches you about such a scheme, the odds are good
that it's too good to be true, and you need to protect yourself
when the criminal inevitably wants your personal information.
5. Fake charities.
The most egregious scams involve taking advantage of people
giving to charity. Criminals set up fake charities and take
donations, only to pocket the cash. To make sure a charity is
legitimate, the IRS offers this charity search tool that lists
6. Frivolous-argument schemes.
Every year, some tax opponents argue that income tax is
unconstitutional or otherwise illegal for the IRS to collect and
therefore claim incorrect returns showing no tax owed. Using
frivolous tax arguments won't save you in the long run, though,
and will only get you in trouble. Click here to see a list of
frivolous tax arguments to avoid.
Phishing involves electronic communications that appear to be
from the IRS requesting tax information. The key way to avoid
phishing is to understand that the IRS
initiates contact by email, text messages, or social-media sites.
If you get an attempted phishing contact, you can help the IRS
fight criminals by reporting it.
Criminals don't quit on April 15
These tax scams can strike at any time of the year, so you have
to remain vigilant even after April 15 has come and gone. By
taking the right steps, though, you can hold the criminals at bay
and protect yourself from scam artists.
Apple isn't doing anything illegal with its taxes, but some
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