Tax preparation season has opened, and this year, once again, procrastinators will have an extra three days to dawdle. The tax filing deadline is April 18 rather than April 15, due to a Washington, D.C., holiday.
For early-bird filers, there was also good news: Under provisions of the Protecting Americans from Tax Hikes Act of 2015 (PATH), employers had to file their copies of Form W-2 and in certain cases Form 1099-MISC for independent contractors to the Social Security Administration by Jan. 31.
To make filing taxes easier, the IRS provides free software called “Free File” to anyone whose adjusted gross income in 2016 was $64,000 or less — that’s more than 70 percent of taxpayers. People who earned more than $64,000 may use Free File Fillable Forms, the electronic version of paper forms. But it’s nuts to use paper, because the error rate is about 20 percent, compared with less than 1 percent for electronic filing. Also, if you’re due a refund, it will come faster if you e-file.
The IRS expects more than 153 million tax returns to be filed this year, of which more than 70 percent should receive a refund. Ninety percent of refunds should be issued in less than 21 days. But, starting this year, the IRS couldn’t issue refunds before Feb. 15 for those filers who claim the earned income tax credit or the additional child tax credit. This applies to the entire refund, not just the portion associated with these credits. The extra time was to help the IRS stop fraudulent refunds from being issued to identity thieves and fraudulent claims with fabricated wages and withholdings.
The IRS saw about a 400 percent surge in phishing and malware incidents in the 2016 tax season, which is why it is important to underscore these security reminders:
- The IRS does not initiate contact with taxpayers by email or through social media channels to request personal or financial information. The agency is aware of email phishing scams that appear to be from the IRS and include a link to a bogus website intended to mirror the official IRS website. These emails often contain the direction “You are to update your IRS e-file immediately.”
- The emails mention USA.gov and IRSgov (without a dot between “IRS” and “gov”). Don’t get scammed. They are not from the IRS. If you get a message that looks suspicious, do not respond to the email or click on the links. Instead, forward it to the IRS at firstname.lastname@example.org.
- The IRS will never call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes.
- The IRS does not threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
- The IRS does not demand that you pay taxes without giving you the opportunity to question or appeal the amount it says you owe, and it never asks for credit or debit card numbers over the phone.
EXAMPLES OF RECENT TAX SCAMS
- Fake IRS tax bills related to the Affordable Care Act, which involves a fraudulent version of CP2000 notices for tax year 2015.
- Telephone scammers targeting students and parents demanding payments for nonexistent taxes, such as the “federal student tax.”
- Robocalls, in which scammers leave urgent messages telling taxpayers to call back to settle their “tax bill.”
- In the latest trend, IRS impersonators demand tax payments be made using iTunes and other gift cards.
Jill Schlesinger, a certified financial planner, is a CBS News business analyst. She welcomes comments and questions at email@example.com