Top Tax Schemes You Should Avoid

Filed under: Personal Finance, News

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.