The start of tax season also means it’s prime time for tax scams.
The thieves want to take advantage of your tax-filing anxiety and desire for a big refund, and they use it as an opportunity to steal your identity and your money. They also jump on current events to make their schemes sound legitimate and find new ways to hook you.
“Whenever there’s some sort of new program that is driven around an announcement or event, you can always count on the bad guys to be right there with their hands out,” says James E. Lee, president of the Identity Theft Resource Center, a nonprofit.
“It’s always evolving. Whenever a big pot of money becomes available or there some new event, they’re going to be there,” he said.
Here are six tax scams to watch out for now, and resources to help protect yourself.
1. Economic Impact Payment Stimulus Scams
This scam, which was common during the COVID-19 pandemic, recently resurfaced when the IRS announced in December 2024 that it would be issuing automatic payments of up to $1,400 to more than 1 million eligible taxpayers who did not claim the Recovery Rebate Credit on their 2021 income tax returns.
This credit was for certain people who did not already receive their full economic impact payments, also known as EIPs or stimulus payments. The IRS planned to automatically send the Recovery Rebate Credit money to eligible taxpayers in late January 2025 either through direct deposit or a paper check.
But scammers have been contacting people through text, email, phone and social media claiming they can receive an EIP payment if they fill out a form with their personal information or bank account number. The announcement may look real, but it’s a scam.
“The IRS is not just going to pick up the phone and call you, and they’re never going to text you. You’re not going to get an instant message,” Lee says.
“You can be very confident that they will not be reaching out to you unless you get a letter from them,” he says.
And watch out for fake letters, too. “With AI, it’s making the fakes better,” he adds.
The Identity Theft Resource Center recently issued an alert about the scam, with examples of fraudulent announcements.
Visit the IRS’s “How to Know It’s the IRS” factsheet for more information about the ways the agency will legitimately contact you and how to Report an IRS Impersonator or other tax scams.
2. Disaster-Related Tax Scams
When disasters were in the headlines this year — especially after the hurricanes in the Southeast and wildfires in Los Angeles — scammers jumped in with a variety of tax-related scams.
Some offered to help disaster victims apply for relief funds or tax breaks — either charging large up-front fees and disappearing or using the opportunity to collect personal information and bank account numbers.
“There will be disaster relief funds and tax abatements attached to that, and they’re ready to scam their way into that,” Lee says.
Others create fake charities and steal your donations, leaving you with the aftershock months later when your charitable deduction is denied because the charity isn’t real.
You can look up eligible organizations using the IRS’s tax exempt organization search tool.
[What to Know About Taxes After a Disaster]
3. Tax ID Theft
Tax ID thieves file a fraudulent tax return in your name and claim your refund before you do. The IRS has implemented new procedures to reduce tax ID theft over the past few years, but you can also take some steps to help protect your refund.
The easiest way to avoid ID theft is to file your income tax return sooner rather than later. “Filing early is the best way to get ahead of the bad guy,” Lee says. That way, you can claim your refund before an ID thief claims it in your name.
[READ: 4 Benefits of Filing Taxes Early]
You can add an extra layer of protection by getting an Identity Protection Personal Identification Number, called an IP PIN, from the IRS, which is a six-digit number that prevents someone else from filing a federal tax return using your Social Security or Individual Taxpayer Identification Number.
“The best thing is having an account with the IRS and getting an IP PIN,” says Morris Armstrong, an enrolled agent in Cheshire, Connecticut, who says the IRS refers to the IP PIN as the “gold standard” in tax ID theft protection.
To get an IP PIN, start by signing up for an IRS online account. Log into your account and follow the steps for identity verification. Then, click on the profile tab to request your IP PIN.
Use that IP PIN when filing your federal tax return, and be sure to let your tax preparer know the number so the return isn’t rejected when e-filed. An IP PIN is valid for one calendar year.
“If we look back over time, the instances of some form of identity fraud related to taxes has been going down and down,” Lee says.
“The IRS has made a lot of improvements that have been effective,” such as wider use of the IP PIN and protocols to reduce the number of fraudulent tax returns that make it through the system, he adds.
“That doesn’t mean there isn’t still identity theft and fraudulent tax returns, but it’s not the number we used to see.”
4. Fake Tax Preparers
Tax filing can be complicated, and scammers know people are looking for help. Some pose as tax preparers and charge upfront fees then disappear without filing your return.
Others charge a percentage of your refund and make it seem like you’ll get a lot of money back — but they file a return with credits you aren’t eligible for, which you don’t realize until you receive an IRS notice months later that the credits have been denied.
And since your tax records are a treasure trove for ID thieves, some just use tax filing as a way to get your personal information and steal your identity.
“Especially during tax season, people are sometimes frustrated with their tax situation or on edge and may be susceptible to those types of scams because they’re looking for help,” says Brittany Benson, lead tax research analyst with the Tax Institute at H&R Block.
You can verify a tax preparer, or find one to work with, in the IRS’s Directory of Federal Tax Return Preparers.
Enrolled agents are authorized to represent taxpayers in front of the IRS and must pass a three-part exam from the IRS or have experience as a former IRS employee. They must also meet ethics and continuing education requirements.
You can find an enrolled agent using the National Association of Enrolled Agents tax expert directory.
CPAs must pass a rigorous exam and meet education, experience and ethics standards. Some focus on business taxes, but others specialize in personal taxes.
You may be able to get free tax help through the IRS’s Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs. See the IRS’s Get Free Tax Help tool to find help near you.
The IRS factsheet about choosing a tax preparer includes additional information and resources to help you find a reputable tax professional.
Even if your tax preparer is legitimate, make sure he or she takes steps to protect your personal information.
“In my firm, we use a secure portal with clients to exchange documentation and tax returns. We do not accept attachments or emails,” Armstrong says.
His staff has also gone through training on cybersecurity issues. “I use biometrics and a security key on my personal and business logins,” he says.
Keep your information safe on your computer and when disposing of paper financial records. “Never forget that a lot of personal information is found in your trash can, and that is why I shred,” Armstrong says.
[How to Find a Reputable Tax Preparer Near You]
5. Government Benefits Fraud
Especially common during the COVID-19 pandemic, a taxpayer would learn that their identity had been used to apply for a benefit — such as unemployment — and they weren’t aware of it until they received a 1099 tax form reporting the taxable income, Lee says.
If you receive a strange 1099, don’t ignore it. It may be from a state where someone filed for unemployment benefits in your name.
“It may not be in a state you live in,” Lee says. In past versions of the scam, he adds, “people would have unemployment benefits taken out on their names in multiple states.”
Alert the state issuing the 1099 — or other issuing company or agency — about an unexpected 1099 form.
6. Bad Tax Advice on Social Media
Your social media feeds may be filled with posts about tax breaks during tax-filing season. Some of these are scams — the tax breaks may not exist, but the posters are looking for clicks or personal information, and some charge fees to help you take advantage of these “special breaks.”
Benson recently noticed TikTok posts about a “child support credit” that doesn’t exist.
“It was completely made up — it wasn’t a real thing,” Benson says. “They made it seem real, and those videos go viral.”
In early December, Danny Werfel, the former IRS Commissioner, warned about these schemes in an IRS alert: “Social media platforms are rife with individuals making claims about tax credits or deductions that stretch the truth or are outright lies, aimed at gaining themselves clout or pushing up their views. At the same time, this puts their audience’s tax returns and personal finances at risk,” he said.
Some examples include a “self-employment tax credit” that claimed self-employed individuals and gig economy workers could get up to $32,000 through a tax credit that does not exist.
A similar scam focused on household employment taxes and advised taxpayers to invent fictional household employees.
Another common scheme was said to help individuals claim a fuel tax credit that, in reality, is only available for qualifying business activity, such as running a farm or purchasing aviation gasoline. See the IRS’s alert for more examples of these schemes.
If you’re wondering whether a tax break is real, you can search for more information at the IRS Credits and Deductions page.
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6 Tax Scams and How to Avoid Them originally appeared on usnews.com
