Now we’re cooking with gas.
After weeks of reports that refunds were down, last week’s data from the IRS shows a new trend. Although overall quantity of refunds are down, now the average refund is up 1.9%. After so many headlines to the contrary, I suppose that qualifies as good, national tax news.
But here is the thing to remember about tax refunds:
That is YOUR money that you’re “getting back”.
Think of it like this: you go to a shop and buy something for $5. You hand the cashier a $10 bill. The cashier hands you back a $5 bill as change. Did you just get more money? Of course not; you paid more than the bill, so you got YOUR money back.
With taxes, many DFW Area people are doing this throughout the year, only backwards. You’re paying the “cashier” (er, the IRS) all year long in withholding and estimated payments, and then you hope you’ve paid enough to cover the tab. If, at the end of the year, you had paid $10 for the $5 product, your $5 change is your refund.
Imagine this scenario now — you have a friend who buys the exact same product for the same price and, after all the payments all year long, he paid the cashier $100. WOW, he gets a $95 refund! That’s way more than your $5. But did your friend “do better” than you did? Did he work the system to his advantage? Of course not. Quite the contrary.
A relentless focus on helping our DFW Area clients KEEP more of their money in their accounts is what drives our work. Yes, we believe that government needs funding, and yes, taxes are how that happens.
But our mission is that our clients would never fall victim to the confusion inherent within our tax system simply because they didn’t know any better.
It’s a great mission, and it drives our hearts and minds during this season. And we are grateful that you let us do it for YOU.
Now, speaking of falling victim…
Penny Morgan’s Three Big Tax Scams And How To Beware
“Accuracy is the twin brother of honesty; inaccuracy, of dishonesty.” – Nathaniel Hawthorne
Around this time of year, scammers and fraudsters come out of the walls to take advantage of unsuspecting taxpayers.
Lest you think, “That would never happen to me,” I want to provide you with some tax scams to look out for. It helps to know how scammers strike, and the more you know, the more friends you could help in the future.
Here are a few of the “usual suspects”, and how they’ll attempt to access your information and put a damper on your entire financial world.
1. Something’s Phishy
Here is where they try to steal your info. Phishing is defined as “the fraudulent practice of sending emails purporting to be from reputable companies in order to induce individuals to reveal personal information”.
If you receive an email saying it’s from the IRS, DO NOT click that email. The IRS will never initiate contact about a bill or refund via email.
Similarly, if you receive a phone call “from the IRS”, I want you to hang up the phone. If the IRS needs to communicate with you, they will first do so through postal mail.
2. Bad Tax Pros, Bad Charities
Unfortunately, some DFW Area tax professionals enter the business with the sole purpose of illegal dealings down the road. They want your information for their own financial gain, and it’s important you do your research before working with them.
Do a thorough online search, read reviews, and ask them if they have referrals you could talk to about their services. (Speaking of which, a review from YOU on Google or other social platforms would always be nice!)
In addition, similar scammers exist in the (fake) charity world. They claim your donations are tax-free, only to solicit money from you with no real purpose behind their organization. Again, these days you can do a lot of online research on your own. But if you have any checks in your system, and don’t have friends or family who would recommend the charity, it’s probably best to stay away.
3. False Claims
First, please do not have anyone prepare your taxes who asks you to sign a blank return or charges fees based on a percentage of your refund. If they do, that’s a big red flag.
Second, scammers often try to get taxpayers to falsely claim income so they can qualify for the Earned Income Tax Credit. This is best avoided with honesty, and not falsifying anything on your return that would affect the Earned Income Tax Credit or Child Tax Credit.
With honesty as your backbone, here’s the summary of freedom from fraudulent activity:
- Have Your Guard Up: If anyone contacts you from the IRS, be wary of what they are trying to sell you. Always be skeptical.
- Triple-Check Your Sources: The internet is a vast, scary place (where most scammers reside), but there are also great resources (keyword searching through Google etc.) to utilize and find out if the organizations you’re working with are frauds or the real deal.
- You Guessed It: Please feel free to reach out to us! Not only do we want to help you navigate tax season (all year round), we want to keep you far away from saboteurs. In that sense, view us like Tax Ghostbusters.
We exist to come alongside you and serve…
Penny Morgan Tax Associates