5 Tax Scams You Should Know About for 2018

Tax season is underway. While no one really enjoys doing their taxes, everyone looks forward to getting a tax refund. It's no wonder why. According to the IRS, over 80 percent of tax returns resulted in a refund for tax year 2015. And the average refund was a whopping $3,120.

However, all that money makes tax season one of the busiest times of the year for scam artists. Each year, criminals target taxpayers to steal their personal information or their tax refunds.

Most scammers prey on vulnerable populations, such as the elderly or first-time tax filers, but anyone can be at risk. These are the top tax scams you should be aware of in 2018. (See also: Beware These 6 Phony IRS Calls and Emails)

1. Threatening phone calls

A common tax scam involves aggressive phone calls. You'll receive a call — sometimes from a number that shows up on caller ID as from a Washington D.C. area code— and the person on the line will claim to be a representative of the IRS.

They can be very convincing. They may know your full name, your mother's maiden name, and even the last few digits of your Social Security Number.

That person will say you're behind on your taxes or filed a fraudulent return. They may threaten you with immediate arrest, going so far as to say police are on their way to your home. They'll say the only way to avoid jail is by making an immediate payment with a credit card over the phone.

Know that the IRS does not communicate over the phone and does not threaten taxpayers with jail time. If there is a problem with your return, or if you do owe money, you will receive a notification in the mail. If you receive these calls, hang up right away.

2. Information phishing

Similarly, you may receive calls or emails from so-called IRS representatives or tax preparation software companies. They may claim that there's a problem with your return or refund and that they need to verify your information to fix the issue. They'll ask for personal information like your Social Security number, birth date, and place of employment. Then, they use that information to file a fraudulent return in your name to claim your refund.

Remember, the IRS will only send you information through the mail. If you're unsure if an email is real, open up a new browser window and log into your account that way, or look up your tax preparer's phone number and call that person directly.

3. Requests for gift card payments

Another scam involves a call from an IRS impostor who claims that your return notification letter was returned as undeliverable. That person will tell you your bill is overdue and that you must make a payment immediately.

Instead of asking for your credit card or personal information, they'll ask you to send them a prepaid gift card or debit card. Know that the IRS does not accept payments in this format.

4. Identity theft

Identity theft is a serious issue. You may think that canceling and replacing your credit cards is all you need to do, but the problem can be much more involved than you think. Thieves can use your personal information to submit a fraudulent tax return and collect your refund.

If you went through any form of identity theft, or if your personal information was stolen, it's a good idea to place a fraud alert on your credit reports and notify the IRS. If you suspect tax-related identity theft — for example, when you try to file your return you get a notice that your return has already been filed — you'll need to fill out IRS Form 14039, Identity Theft Affidavit, and follow the mailing instructions on the form.

Moreover, it's a good idea to complete and submit your tax return as soon as possible to ensure thieves cannot submit a return in your name. (See also: 8 Reasons You Should File Your Taxes as Soon as Possible)

5. Tax preparer fraud

Fraudulent tax prep "professionals" often advertise their ability to get you the largest refund possible. They do this by falsifying information on your return, such as adding nonexistent dependents, claiming credits or deductions you don't qualify for, and reporting incorrect income. They'll also typically base their rates off a percentage of your refund.

The IRS encourages you to ask your tax preparer questions about anything suspicious or confusing, and to look into their credentials and certifications before agreeing to hand over your return. All legitimate tax preparers should have a PTIN (preparer tax identification number).

It's important to carefully vet your tax professional and to closely look over any forms before signing. Regardless of whether you've been scammed or not, you will still be on the hook for any fraudulent information reported on your return.

Verifying any IRS activity

Some scam artists can be very convincing. If you're not sure whether it's a con or not, hang up or close your email. Call the IRS directly at 1-800-829-1040. You'll be connected with a real representative who can review your account and let you know if there's anything they need from you. They can also help you report any fraudulent activity or scams.

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5 Tax Scams You Should Know About for 2018

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