IRS Identity Theft Season Begins Now
IRS Identity Theft Season Begins Now
Be on your guard as the IRS identity theft season starts in late January. Here’s what you need to know.
Each year thieves try to steal billions in Federal Withholdings by stealing your identity. As the IRS focuses more attention on this quickly growing problem, now is the time of year to be extra vigilant.
Early tax filing season is the worst time
Your federal tax account at the IRS has plenty of money in it from all the taxes withheld from your paycheck during the course of the year. Until you file your tax return, the IRS does not know whether you need to pay more in or they need to refund you the excess amounts withheld.
Thieves know this too, and will try to file a fraudulent tax return before you have time to submit your own. By doing this, they can steal some of your withholdings and be long gone by the time you file your own tax return. So what can you do?
- File early. The sooner you file your tax return, the less likely a thief will beat you to your refund.
- Check your credit reports. See if there is any suspicious activity on your accounts and on your credit reports.
- Protect your ID. Be suspicious; never give out your Social Security Number, do not leave your credit card unattended, never give ID information to someone who called you, use the password function on your phone, be aware of strange mail, and shred important documents. Often your best defense to IRS ID theft is to use best practices to protect your information.
The IRS is becoming a better spotter
If the IRS suspects something is wrong with your filed tax return they will send you a notice. If this happens to you:
- Respond Immediately. Get the direct contact information from the IRS web site and let them know that you have a possible identity theft problem.
- File an Identity Theft Affidavit (IRS form 14039). This will record your problem with the IRS and they will take extra steps to ensure your account activity is coming from you and not the ID thief.
- File a police report.
- Contact the credit bureaus.
Having your identity stolen is one thing. Having your tax withholding stolen and then having to unravel this problem within the IRS is a major hassle. Try to stay vigilant and know that there are steps to help protect your tax records. Is there good news in all this? If the IRS pays out a refund to someone stealing your identity, they are on the hook for this loss, not you.
Check Those 1099s
Check Those 1099s
As you receive informational tax forms like W-2s and 1099s, you will want to make sure they are correct and received on a timely basis. Here are some tips to make this part of your tax filing experience smooth.
Now is the time you will start receiving year-end informational tax forms. We’re all fairly familiar with W-2s from our employer, but you will also probably receive a number of different 1099s. Make your tax filing experience smooth this year by staying on top of these informational tax returns. Here are some tips.
- Know the different types of 1099s. The most common 1099s that taxpayers receive are:
- 1099 INT: for interest received
- 1099 DIV: for dividends received
- 1099 B: for brokerage transactions (selling stocks and mutual funds)
- 1099 R: for annuity, retirement, and pension income
- 1099 MISC: for miscellaneous income
- 1099 K: for merchant card activity
- Make a list. Review last year’s list of informational tax forms and create a checklist of them. Add to that list any new forms you might expect to receive. Mark them off your list as you receive them.
- Check for accuracy. Review each of the informational tax forms for accuracy. Is the income, interest, annuity or other income correctly reported? If cost is reported on the 1099 B, is it the correct amount? Make sure your name and your tax ID (Social Security Number) are also correct.
- Take corrective action. If you have not received your information return by the mid February, contact the issuing organization. Also call and start the process to correct any errors you find. Make sure you follow up any correction request in writing.
- Conduct withholding verification. If the supplier withheld any tax on this activity ensure it is noted as well.
- Understand those 1099 Ks. This is the new kid on the 1099 block and was introduced to try to capture sales activity from places like e-bay and Amazon. If you receive one of these, please pay special attention to the information being reported to you and the IRS. These forms are complicated and track payment processing transactions. If not properly understood, you could inadvertently double book income on your business activity.
If you have any questions please ask. (813) 283-0642 or email ajhall@hcpagrp.com
Do You Have a Sleeping Tax Penalty for 2014? – If you know someone who lacks health insurance…read this!
Beginning in January, 2014, you will be required to have health insurance or face a potential penalty. The initial penalty will be $95 per individual, $285 per family or 1% of your income whichever is greater. There is also a potential penalty assessed on employers who fail to offer employees health care insurance.
Beginning in January, 2014, virtually everyone will be required to have health insurance or face a potential penalty. The initial penalty will be $95 per individual, $285 per family or 1% of your income whichever is greater. There is also a potential penalty assessed on employers who fail to offer employees health care insurance.
What is not known is whether there will be some penalty grace period due to all the sign up problems with the government’s web site. If you are uninsured, your best defense is to review your health insurance options and register for an appropriate health insurance policy as soon as possible.
What you need to know
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Every state is required to have an insurance exchange. This exchange is a web site where everyone can view health insurance options. If you need to shop for a policy, this is a good place to start. |
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No pre-existing condition limitation. Remember you are no longer to be refused insurance because of a pre-existing condition. Nor can you be charged an incremental premium based on health or gender. |
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Buy or pay the penalty? Hopefully, not many will be faced with this dilemma. Part of the health insurance legislation is the requirement for most small businesses to offer a qualified plan or face a penalty billed to their business. |
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Will I be penalized? There are exceptions to the penalty if you have to spend more than 8% of your household income on the cheapest health care insurance premiums. There are also subsidies if you cannot afford health care insurance. This is in the form of a health insurance premium tax credit if your household income is between 100 and 400 percent of the federal poverty level. |
If you do not have health insurance start looking now. Remember this penalty may already be impacting you. With proper planning you should be able to avoid the unpleasant task of facing a tax penalty surprise at the end of 2014.
Beware of This New IRS Scam
Beware of This New IRS Scam
The IRS recently announced a new scam to steal your money from theives posing as the IRS. Here is what you need to know to protect yourself.
Lost in the recent news regarding stolen identities at Snapchat and the credit and debit card theft at major retailers, is the dramatic increase in identity theft and scams using the IRS. One of the more recent scams announced by the IRS is worth noting.
The scam
Callers identifying themselves as the IRS phone you and disclose that you owe delinquent taxes. They say that unless there is immediate payment by debit or credit card you may be subject to immediate deportation, arrest, loss of a license or loss of your business.
Why does this work?
These callers sound legitimate and the scams are often fairly sophisticated. Per the IRS, the callers who commit this fraud often;
- Use common names and fake IRS badge numbers.
- Know the last four digits of the victim’s Social Security number.
- Make caller ID appear as if the IRS is calling.
- Send bogus IRS emails to support their scam.
- Call a second time claiming to be the police or DMV, and caller ID again supports their claim.
What can you do?
While the IRS never initiates communication via email, they sometimes do initiate contact via the phone. So what steps can you take to ensure this does not happen to you?
- Mail is the typical IRS contact vehicle. Initial communication with the IRS is most often the mail. Your fraud alert should go way up with a phone call or email.
- No personal information from you. Never give personal information to the caller. This is true even if the person calling sounds legitimate.
- Get their information. Get the caller to give you all the information they have on the case. Get their badge number. Also get the name of their supervisor and the division they work with at the agency. Then hang up.
- Initiate the contact. After hanging up, contact the IRS. You can then confirm whether the call was legitimate. Here are the legitimate contact points:
- Internet: www.irs.gov
- 1040 questions: 1.800.829.1040
- To report fraud: Treasury Inspector General for Tax Administration at 800-366-4484
If, by chance, the request appears to be genuine please ask for help prior to sharing any information. As the old adage goes, it is better to be safe than sorry.