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.
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 https://www.irs.gov/payments/finding-out-how-much-you-owe.
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.
Information provided on this web site “Site” by Thompson Greenspon is intended for reference only. The information contained herein is designed solely to provide guidance to the user, and is not intended to be a substitute for the user seeking personalized professional advice based on specific factual situations. This Site may contain references to certain laws and regulations which may change over time and should be interpreted only in light of particular circumstances. As such, information on this Site does NOT constitute professional accounting, tax or legal advice and should not be interpreted as such.
Although Thompson Greenspon has made every reasonable effort to ensure that the information provided is accurate, Thompson Greenspon, and its shareholders, managers and staff, make no warranties, expressed or implied, on the information provided on this Site, or about any other website which you may access through this Site. The user accepts the information as is and assumes all responsibility for the use of such information. Thompson Greenspon also does not warrant that this Site, various services provided through this Site, and any information, software or other material downloaded from this Site, will be uninterrupted, error-free, omission-free or free of viruses or other harmful components.
Information contained on this Site is protected by copyright and may not be reproduced in any form without the expressed, written consent of Thompson Greenspon. All rights are reserved.
Ready to talk to one of our specialists?
Our specialists are all seasoned professionals who have years of experience working within your industry. Reach out to us today to schedule a consultation.