From the IRS: Don’t Fall for New Tax Scam Tricks by IRS Posers

Don’t Fall for New Tax Scam Tricks by IRS Posers

Though the tax season is over, tax scammers work year-round. The IRS advises you to stay alert to protect yourself against new ways criminals pose as the IRS to trick you out of your money or personal information. These scams first tried to sting older Americans, newly arrived immigrants and those who speak English as a second language. The crooks have expanded their net, and now try to swindle virtually anyone. Here are several tips from the IRS to help you avoid being a victim of these scams:

• Scams use scare tactics. These aggressive and sophisticated scams try to scare people into making a false tax payment that ends up with the criminal. Many phone scams use threats to try to intimidate you so you will pay them your money. They often threaten arrest or deportation, or that they will revoke your license if you don’t pay. They may also leave “urgent” callback requests, sometimes through “robo-calls,” via phone or email. The emails will often contain a fake IRS document with a phone number or an email address for you to reply.

• Scams use caller ID spoofing. Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legit. They may use online resources to get your name, address and other details about your life to make the call sound official.

• Scams use phishing email and regular mail. Scammers copy official IRS letterhead to use in email or regular mail they send to victims. In another new variation, schemers provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. All in an attempt to make the scheme look official.

• Scams cost victims over $20 million. The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of about 600,000 contacts since October 2013. TIGTA is also aware of nearly 4,000 victims who have collectively reported over $20 million in financial losses as a result of tax scams.
The real IRS will not:

• Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.

• Demand that you pay taxes and not allow you to question or appeal the amount that you owe.

• Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.

• Ask for credit or debit card numbers over the phone.

• Threaten to bring in police or other agencies to arrest you for not paying.

If you don’t owe taxes or have no reason to think that you do:

• Do not provide any information to the caller. Hang up immediately.

• Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.

• You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you know you owe, or think you may owe taxes:
• Call the IRS at 800-829-1040. IRS workers can help you if you do owe taxes.

Stay alert to scams that use the IRS as a lure. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.

IRS YouTube Videos:
• Tax Scams – English | Spanish | ASL

IRS Podcasts:
• Tax Scams – English | Spanish

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From the IRS: If You Get an IRS Notice, Here’s What to Do

If You Get an IRS Notice, Here’s What to Do

Each year the IRS mails millions of notices and letters to taxpayers. If you receive a notice from the IRS, here is what you should do:

• Don’t Ignore It. You can respond to most IRS notices quickly and easily. It is important that you reply right away.

• Focus on the Issue. IRS notices usually deal with a specific issue about your tax return or tax account. Understanding the reason for your notice is important before you can comply.

• Follow Instructions. Read the notice carefully. It will tell you if you need to take any action to resolve the matter. You should follow the instructions.

• Correction Notice. If it says that the IRS corrected your tax return, you should review the information provided and compare it to your tax return.

If you agree, you don’t need to reply unless a payment is due.

If you don’t agree, it’s important that you respond to the IRS. Write a letter that explains why you don’t agree. Make sure to include information and any documents you want the IRS to consider. Include the bottom tear-off portion of the notice with your letter. Mail your reply to the IRS at the address shown in the lower left part of the notice. Allow at least 30 days for a response from the IRS.

• Premium Tax Credit. The IRS may send you a letter asking you to clarify or verify your premium tax credit information. The letter may ask for a copy of your Form 1095-A, Health Insurance Marketplace Statement. You should follow the instructions on the letter that you receive. This will help the IRS verify information and issue the appropriate refund.

• No Need to Visit IRS. You can handle most notices without calling or visiting the IRS. If you do have questions, call the phone number in the upper right corner of the notice. You should have a copy of your tax return and the notice with you when you call.

• Keep the Notice. Keep a copy of the notice you get from the IRS with your tax records.

• Watch Out for Scams. Don’t fall for phone and phishing email scams that use the IRS as a lure. The IRS first contacts people about unpaid taxes by mail – not by phone. The IRS does not initiate contact with taxpayers by email, text or social media.

Additional IRS Resources:
• Tax Topic 651 – Notices – What to Do
• Tax Topic 653 – IRS Notices and Bills, Penalties and Interest Charges
• Understanding Your CP2000 Notice

Ten Social Security Tax Questions

Ten Social Security Tax Questions

There were several programs established by the Social Security Act to ensure individuals with disabilities and people who retire have supplemental income. It also established a program for survivors to receive a death benefit. Supplemental income from Social Security keeps more than 40 percent of the elderly population out of poverty. With all of the changes and amendments made since 1935, the tax implications are complicated for individuals and employers. The following are 10 common tax questions related to Social Security.

1. Are Social Security benefits taxed? In some cases, benefits may be subject to federal income tax. If the benefits are a person’s only source of income, they are not likely to be taxed. However, people who have additional income will usually be subject to the federal income tax.

2. Are there base amounts for benefits? The base amounts are determined by a person’s filing status. The base amount for a married couple filing jointly is $32,000. For married couples filing separately who live together, it is $0. The base amount is $25,000 for all other taxpayers.

3. What percentage of benefits is subject to income tax? If an individual adds his or her income to half of the total received benefits and it exceeds more than the base amount, up to 50 percent of that individual’s benefit will be counted as gross income. The base amounts are the same as those listed in the previous paragraph. However, if the person’s income exceeds $40,000 for married filing jointly status, $0 for married filing separately status or $25,000 for all other taxpayers, up to 85 percent of the total amount of benefits must be counted as gross income.

4. Are workers’ compensation benefits counted as Social Security on tax forms? Yes, workers’ compensation benefits are counted as Social Security since they cause a reduction in the tier I category for disability benefits.

5. Why does adjusted gross income include nontaxable interest? This is done to limit the chances of manipulation on tax liability benefits.

6. What are the reporting requirements from the Social Security Administration? Information must be sent to each beneficiary every year that shows any repayments from the beneficiary and any reductions of benefits.

7. How are lump-sum retroactive benefits and over-payments taxed? Any benefits paid to an individual are reduced by over-payments that are repaid. Retroactive lump-sum payments are treated as payable during the year when they were received. Any benefits received before 1984 are not taxable.

8. Are income taxes withheld from Social Security benefits? Withholding is allowed but it is voluntary. Benefit recipients can submit a Form W-4 if they wish to have federal income taxes taken directly out of their benefits. Withholding can be chosen at several different percentage rates up to 25 percent of the total benefit payment.

9. How are Social Security taxes reported for domestic help? The 2015 threshold for coverage of a domestic worker was $1,900 in 2015. Always check current rules for updated threshold amounts. Any wages paid to domestic workers under the age of 18 are exempt from Social Security taxes. Being a student is classified as an occupation.

10. If a person receives wages as an employee but is also self-employed, how much income is subject to self-employment income tax? The difference between the base of maximum earnings and the wages earned as an employee is the amount that is subject to taxation as self-employment income. If the net earnings from self-employment income are more than $434, no self-employment tax is due. However, the amount that is considered taxable may be less than $400 in some cases.

There are many other common concerns related to Social Security taxes and benefits. To learn more or for answers to other questions, discuss concerns with an agent.

From the IRS: Top 10 Tips to Know if You Get a Letter from the IRS

Top 10 Tips to Know if You Get a Letter from the IRS

The IRS mails millions of notices and letters to taxpayers each year. There are a variety of reasons why we might send you a notice. Here are the top 10 tips to know in case you get one.

1. Don’t panic. You often can take care of a notice simply by responding to it.

2. An IRS notice typically will be about your federal tax return or tax account. It will be about a specific issue, such as changes to your account. It may ask you for more information. It could also explain that you owe tax and that you need to pay the amount that is due.

3. Each notice has specific instructions, so read it carefully. It will tell you what you need to do.

4. You may get a notice that states the IRS has made a change or correction to your tax return. If you do, review the information and compare it with your original return.

5. If you agree with the notice, you usually don’t need to reply unless it gives you other instructions or you need to make a payment.

6. If you do not agree with the notice, it’s important for you to respond. You should write a letter to explain why you disagree. Include any information and documents you want the IRS to consider. Mail your reply with the bottom tear-off portion of the notice. Send it to the address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

7. You won’t need to call the IRS or visit an IRS office for most notices. If you do have questions, call the phone number in the upper right-hand corner of the notice. Have a copy of your tax return and the notice with you when you call. This will help the IRS answer your questions.

8. Always keep copies of any notices you receive with your other tax records.

9. Be alert for tax scams. The IRS sends letters and notices by mail. The IRS does not contact people by email or social media to ask for personal or financial information.

10. For more on this topic visit IRS.gov. Click on the link ‘Responding to a Notice’ at the bottom left of the home page. Also, see Publication 594, The IRS Collection Process. You can get it on IRS.gov/forms at any time.

Additional IRS Resources:
• Tax Topic 651 – Notices – What to Do
• Tax Topic 653 – IRS Notices and Bills, Penalties and Interest Charges
• Understanding Your CP2000 Notice
IRS YouTube Videos:
• Received a Letter from the IRS? – English | Spanish | ASL

From the IRS: IRS.gov: Simply the Best Place to Get Tax Help

IRS.gov: Simply the Best Place to Get Tax Help
If you need help with your taxes, the IRS website is the place for you. There is no waiting for service and it has tax tools that are easy to use. You can even prepare and e-file your tax return for free with IRS Free File. If you have questions, you can get the answers you need, when you need them. Here are the best reasons to make IRS.gov your one stop shop for tax help from the IRS.

• Use IRS Free File. You can prepare and e-file your federal taxes for free with IRS Free File. Free File does the hard work for you. If you made $60,000 or less, you can use free name-brand tax software. If you earned more, you can use Free File Fillable Forms, the electronic version of IRS paper forms. Either way, you have a free e-file option, and the only way you can access it is on IRS.gov.

• Options to File Electronically. You should file electronically whether you qualify for free volunteer help, do your own taxes or hire a tax preparer. IRS e-file is the easiest, safest and most popular way to file a complete and accurate tax return. The fastest way to get your refund is to combine e-file with direct deposit. You get your refund in less than 21 days in most cases. If you owe taxes, e-file has easy pay options so you can file early and pay by the April 15 deadline.

• Help at Any Time. IRS.gov is always available. Use the “Filing” link from our home page for all your federal tax needs. Just about everything you need is right at the tip of your fingers. The Interactive Tax Assistant tool and the IRS Tax Map can answer with many of your tax law questions. You can view, download or print tax products right away. Many IRS tools and products are also available in Spanish.

• Find a Tax Preparer. The IRS has a new tool that you can use to help you find a tax return preparer. The Directory of Tax Return Preparers tool will search and sort for a list of tax preparers in your area with the credentials and qualifications that you prefer.

• Check Your Refund. You can track your refund using the ‘Where’s My Refund?’ tool. It’s quick, easy and secure. You can check the status of your return within 24 hours after the IRS has received your e-filed return. If you file a paper return, you can check your refund status four weeks after you mail it. Once IRS approves your refund, the tool will give you a date to expect it. The IRS updates refund status for the tool no more than once a day.

• Pay Tax Online. Electronic payments are a convenient and safe way to pay taxes. The IRS Direct Pay tool is the fastest and easiest way to pay the tax you owe. Visit IRS.gov/directpay to use this free and secure way to pay directly from your checking or savings account. If you can’t pay all your taxes in full, use the Online Payment Agreement to apply for an installment agreement.

• Use the EITC Assistant. The Earned Income Tax Credit may apply to you if you worked and earned less than $52,427 in 2014. The credit can be worth up to $6,143. Use the EITC Assistant tool to find out if you’re eligible. You may be among the millions of workers who get the EITC this year. And you can use Free File to claim the EITC.

• Figure Your Withholding. The IRS Withholding Calculator tool can help you avoid having too much or too little income tax withheld from your pay. You can use it anytime throughout the year to stay on target.

• Get Health Care Tax Information. You can get all the details about the Affordable Care Act tax provisions on IRS.gov/aca. Visit this site to find out how the health care law affects your taxes, including:

o Reporting health insurance coverage.

o Claiming an exemption from the coverage requirement.

o Making an individual shared responsibility payment.

o Claiming the premium tax credit.

o Reconciling advance payments of the premium tax credit.

The official IRS website is IRS.gov. Don’t be fooled by other sites that claim to be the IRS, but end in .com, .net, or .org. Some scams use phony websites to get your personal and financial information. Thieves also use the information to commit identity theft or steal your money. Visit only IRS.gov for tax help from the IRS.

If you found this Tax Tip helpful, please share it through your social media platforms. A great way to get tax information is to use IRS Social Media. You can also subscribe to IRS Tax Tips or any of our e-news subscriptions.

IRS YouTube Videos:
• Welcome to Free File – English
• Interactive Tax Assistant – English | ASL
• When Will I Get My Refund? – English | Spanish | ASL
• Help for Taxpayers – English | ASL
• IRS Tax Payment Options – English | Spanish | ASL
• Online Payment Agreement – English | Spanish | ASL
• IRS Withholding Calculator – English | Spanish | ASL

IRS Podcasts:
• Interactive Tax Assistant – English
• When Will I Get My Refund? – English | Spanish
• Help for Taxpayers – English
• IRS Tax Payment Options – English | Spanish
• Online Payment Agreement – English | Spanish
• IRS Withholding Calculator – English | Spanish

Be Aware of Identity Theft

As you know, we are having a data breach epidemic.

Commonly, victims are notified by financial institutions (45%), alerts from non-financial companies or agencies (21%), or notices of unpaid bills (13%). While 86% of victims cleared up the resulting credit and financial problems in a day or less, 10% of victims had to struggle with them for a month or more.

Consumers took significant financial hits from all this. The median direct loss from cyberthieves exploiting personal information in 2012 was $1,900, and the median direct loss from a case of credit card fraud was $200. While much of the monetary damage is wiped away for the typical victim, that isn’t always the case.1

Tax time is prime time for identity thieves. They would love to get their hands on your return, and they would also love to claim a phony refund using your personal information. In 2013, the IRS investigated 1,492 identity theft-linked crimes – a 66% increase from 2012 and a 441% increase from 2011.2

E-filing of tax returns is becoming increasingly popular (just make sure you use a secure Internet connection). When you e-file, you aren’t putting your Social Security number, address and income information through the mail. You aren’t leaving Form 1040 on your desk at home (or work) while you get up and get some coffee or go out for a walk. If you just can’t bring yourself to e-file, then think about sending your returns via Certified Mail. Those rough drafts of your returns where you ran the numbers and checked your work? Shred them. Use a cross-cut shredder, not just a simple straight-line shredder (if you saw Argo, you know why).

The IRS doesn’t use unsolicited emails to request information from taxpayers. If you get an email claiming to be from the IRS asking for your personal or financial information, report it to your email provider as spam.2

Use secure Wi-Fi. Avoid “coffee housing” your personal information away – never risk disclosing financial information over a public Wi-Fi network. (Broadband is susceptible, too.) It takes little sophistication to do this – just a little freeware.

Sure, a public Wi-Fi network at an airport or coffee house is password-protected – but if the password is posted on a wall or readily disclosed, how protected is it? A favorite hacker trick is to sit idly at a coffee house, library or airport and set up a Wi-Fi hotspot with a name similar to the legitimate one. Inevitably, people will fall for the ruse and log on and get hacked.

Look for the “https” & the padlock icon when you visit a website. Not just http, https. When you see that added “s” at the start of the website address, you are looking at a website with active SSL encryption, and you want that. A padlock icon in the address bar confirms an active SSL connection. For really solid security when you browse, you could opt for a VPN (virtual private network) service which encrypts 100% of your browsing traffic; it may cost you $10 a month or even less.3

Make those passwords obscure. Choose passwords that are really esoteric, preferably with numbers as well as letters. Passwords that have a person, place and time (PatrickRussia1956) can be tougher to hack.4

Check your credit report. Remember, you are entitled to one free credit report per year from each of the big three agencies (Experian, TransUnion, Equifax). You could also monitor your credit score – Credit.com has a feature called Credit Report Card, which updates you on your credit score and the factors influencing it, such as payments and other behaviors.1

Don’t talk to strangers. Broadly speaking, that is very good advice in this era of identity theft. If you get a call or email from someone you don’t recognize – it could tell you that you’ve won a prize, it could claim to be someone from the county clerk’s office, a pension fund or a public utility – be skeptical. Financially, you could be doing yourself a great favor.

Cyber-attack Alert from my Cybersecurity Study Group

For the first time, a US business has been the victim of a destructive cyber-attack.
•On Monday, the FBI released a five-page confidential document to US businesses.
•The document contained technical information about a destructive malware used in a cyber-attack against a US business last week. While the FBI does not name the affected business, it is believed to be Sony Pictures.
•No information was given on how the malware spreads or what an attack looks like. Businesses are encouraged to contact the FBI immediately if they believe that they have been affected.
•This destructive malware overrides data on hard drives of affected computers and makes it almost impossible to get the data back. The malware also stops computers from being able to reboot.
•Similar malware has been launched in the past at businesses in South Korea and the Middle East. Saudi Aramaco, an oil producer was a victim with 30,000 computers affected.
•Some experts say affected computers can be fixed but require a manual replacing of the hard drive or re-imaging which is very expensive and time consuming.
•The FBI and Department of Homeland Security are investigating the attack.

Remember Savvy Cybersecurity Principle #7: E.M.A.I.L.

While it is unclear on how this malware spreads, it is important to stay vigilant and protect yourself from potential phishing attacks. Always Examine Messages And Inspect Links before clicking on anything or sharing any personal information.