March/April 2017 Tax Tips

These brief tips cover scams to be aware of during tax season, how to check your IRS account online and the benefits of using a charitable trust to cover college expenses.

Watch out for tax scams

With tax season in full swing, criminals posing as IRS officials are stepping up their efforts to steal taxpayers’ money or personal information. To protect yourself, keep in mind that IRS officials will never contact you by email or text seeking personal or financial information. Nor will they use aggressive collection tactics, such as threatening legal action or demanding immediate payment by credit card over the phone. Generally, when launching collection procedures or an audit, the IRS will initiate contact by mail, not telephone.

Here are a few common scams to look out for:

  • Aggressive IRS impersonators call taxpayers, claiming that they owe money to the government that must be paid promptly through a preloaded debit card or wire transfer. Those who refuse to cooperate are threatened with arrest and other legal actions. Callers sound convincing, use fake names and IRS ID badge numbers, and alter the caller ID to make it appear that the IRS is calling.
  • Thieves send phishing emails that appear to be from the IRS that contain links to a fake IRS website and instruct recipients to update their IRS e-files immediately.
  • Scammers posing as the Taxpayer Advocacy Panel (TAP) send emails that purport to be about a tax refund in an effort to trick victims into providing personal and financial information.

If you receive suspicious emails, don’t respond to them or click on any of the links. Instead, forward them to . Contact your tax advisor if you have questions about suspicious IRS claims.

Check your IRS account online

Recently, the IRS launched an online tool that lets you check your account balance, including taxes due, penalties and interest. To use this service, you’ll need to complete a registration process that takes about 15 minutes and requires an email address, a text-enabled mobile phone in your name and certain taxpayer account information. Each time you log in, the site will verify your identity by requiring a code sent via text or email.

For more information, visit

Using a charitable trust for college expenses

If you’re charitably inclined, a charitable remainder trust (CRT) can be a surprisingly effective tool for financing college expenses. To use this strategy, you set up an irrevocable trust that provides an annual income stream to your child or other beneficiary during college. (The income stream must be no less than 5% and no more than 50%, and is subject to other limitations.) The payout percentage is a function of the value of the trust, calculated either as of the time the trust is created or recalculated each year, depending on the type of CRT. At the end of the trust term, the remaining assets are transferred to a qualified charity. You enjoy a charitable deduction based on the value of the charity’s interest, and your beneficiary receives money for college, taxed at his or her tax rate. And if you donate appreciated stock or other property to the CRT, the trustee can sell it and reinvest the proceeds without immediately triggering capital gains taxes. The capital gains, however, may eventually be passed through to the beneficiary.

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