Tuesday, January 19, 2016

Consumer alert: Tax Time Warnings!

The Internal Revenue Service announced filing season opens Tuesday, January 19.
It expects more than 150 million tax returns to be filed this year.
According to the IRS, last year the average refund was $2,797.
For many folks, that's a lot of cash, but be warned, taxpayers should be careful during tax season to not fall for common pitfalls that will cost more money in the long run.
Signs advertising tax preparation services pop up all around town.
However, keep in mind, flashy signs could be a warning sign.
Beware of Preparers Making Big Promises
Taxpayers should think beyond a quick refund.
You're going to these companies that spring up from now through March, because by March all of the quick money is gone, and you're giving them all of your information.
Which then possibly puts a person's identity at risk.
Companies start by luring customers in with holiday loans and later refund anticipation products.
Then, some preparers will take that information left behind and file without the taxpayer's permission.
The shady companies use last pay check stubs, then file in masses the first day the IRS allows submissions.
The taxpayer now goes somewhere else to file and it comes back saying someone else has already filed with your name and social security number.
So, now the taxpayer has to wait months to get their refund from the IRS, plus, deal with the costly implications of a loan.
Avoid Loan Products 
It's a loan, nothing more nothing less, and you're going to pay a fee for that as well as the tax prep fee.
Watch Out for Tax Scams
This includes the now notorius phone calls from people pretending to work for the IRS.
First of all, the IRS is not going to call you, they're going to send you a letter first and ask you to call them.
The most important piece of advice is for people to guard their identity.
That's my main warning, protect your information. Just because a person puts a store front sign up saying they're doing taxes does not mean they're legit.
It's also important to note, no preparer can guarantee a refund or a certain amount of money.
Many taxpayers qualify for the Earned Income Tax Credit.
This can lead to a very large refund, and claiming the credit doesn't necessarily require the expertise of a preparer with a slick store front.