As Tax Season Arrives, Beware of Tax Hacks That can get you Into Trouble With IRS

As Tax Season Arrives, Beware of Tax Hacks That can get you Into Trouble With IRS
Cover Image Source: Tax Hacks | Unsplash | Photo by Leon Dewiwje

With the arrival of tax season at the end of the financial year, an uptick in financial scams has also been witnessed across the US. Amidst many tactics being deployed by scammers, there has been an alarming rise in the number of bogus tax hacks targeting unsuspecting Americans. From fake refund claims to falsified income information, these scams prey on individuals' financial gain. On the other hand, the IRS is working relentlessly to crack down on these tax scams and expose the deceptive game plan of the scammers.

Financial loss be it in scams or by any other means hurts the physical as well as mental state. Image Source: Unsplash|Photo by Gabriel Meinert
 Image Source: Unsplash | Photo by Gabriel Meinert

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Scammers are circulating a tax scheme advising individuals to utilize tax software for filling out W2 forms, potentially resulting in the loss of significant tax refunds and legal entanglements with the IRS.

"There are all these individuals [on social media] purporting to be tax experts, but they are really scamming attention by showing these tax hacks," said Amir Tarighat, CEO of cybersecurity company Agency. "They really aren't even selling anything other than, 'Follow me for more tricks.' It's definitely bad advice," he added.

W2 forms are provided by employers to employees, detailing annual income, tax brackets, EPFO, and retirement contributions. These forms simplify the process of filing income tax returns (ITR), with most employees using them to complete Form 1040. After accounting for deductions and rebates, individuals can determine if they are eligible for a refund or owe money to the IRS. Remember, the more taxes paid, the higher the entitlement for refund.

Image Source: Getty Images | Photo by Scott Olson
Image Source: Getty Images | Photo by Scott Olson

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The IRS flagged 2.4 million tax returns for potential identity theft and fraud in 2023 alone — with fraudulent returns totaling $13.8 billion. Despite organizational efforts to maintain transparency in processes, taxpayers are falling prey to scammers who urge them to fill out W2 forms with false information, such as inflating salary figures to claim larger refunds.

"If you send in a tax return that has W2 information that includes withholding, the IRS will process that pretty quickly, in advance of that matching process. The people who do [falsify information] will ultimately get caught," Keith Hall, CEO of the National Association for the Self-Employed warned.

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"If someone says you can get a big refund by making up a W2, walk away as fast as you can," he added.



 

 

"There is no secret way to get free money or a big refund. People should not make up income and try to submit a fraudulent tax return in hopes of getting a huge refund," said IRS Commissioner Doug O'Donnell.

The IRS has emphasized its zero-tolerance stance on fraudulent claims, citing instances of individuals attempting various versions of the W2 tax scam, including posing as fake employees filing for household employment taxes or seeking credits for sick leave and family leave that are no longer applicable for this tax session.

Social media users are increasingly drawn to these fictitious and unlawful hacks, inviting severe repercussions for tax violations, which can result in a penalty as high as $5,000, as well as potential prosecution for providing false information on their tax return.

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