Money Matters: Avoid common pitfalls of tax season
For the next four weeks, Money Matters will be dedicated to all things taxes. This first report shows some pitfalls to avoid, from identity theft to choosing the wrong preparer. YNN's Tara Lynn Wagner filed the following report.
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When it comes to filing your taxes, it's important to do it right and do it safely. Take e-filing, which is faster than paper filing, less prone to error and also safer than going the paper route.
"If you're worried about security or ID theft, and that's certainly a growing crime, paper to me has a great deal more risk and potential problems than filing in a secure system with the IRS, which to my knowledge has never been compromised," says Mark Steber, the chief tax officer at Jackson Hewitt Tax Service.
If you do paper file, be very careful how you store and eventually dispose of tax documents. Keep documents from the last seven years in a locked filing cabinet, and when it's time for them to go, shred them — the smaller the better.
"Unfortunately identity theft people are waiting and looking for what bags are sitting out on the curb, whether it’s a recycling bag or trash bag," says financial fitness coach Sanyika Calloway. "So you don’t want to just rip it up with your hands and you definitely don’t want to just throw it out."
If you're looking to work with a pro, take precautions. Ask friends and family for recommendations, check their credentials and be on the lookout for red flags, like someone promising you a huge or immediate refund.
"These refund anticipation loans just get you your refund a few days early, but they charge you a lot of money and hundreds of percent interest on that money," says Department of Consumer Affairs Commissioner Jonathan Mintz. "The IRS will get you your money in just a little bit over a week, you'll get every dollar of your refund and who doesn't want every dollar of their refund?"
Finally tax season can also be open season for phishing, as thieves look to lure you into handing over your personal and financial information. Remember, just because a message says it is from the IRS does not mean it is.
"The IRS does not contact people about their accounts, via email, text messages or other social media. In most cases, your contact with the IRS, if there is a question, it's through the mail," says IRS spokeswoman Dianne Besunder.
If you do receive a suspicious email, officials with the IRS say do not respond to it and do not click on any links. Simply forward the email to email@example.com.