Be Aware of Phishing and Email Scams

Phishing and email scams are not uncommon on the Internet. Most individuals are now aware of what phishing and email scams are, but there are still those who don’t have a clue. Either way, it is important to brush up and be aware of what scams are out there so you can avoid your personal information getting in the wrong hands. When it comes to the IRS, you have to be very careful you know how they will correspond with you so you don’t send your vital information to the wrong place and to the wrong people.

Phishing

Let’s say you get an email saying it is from the IRS and they need you to log into your account where you make your online installment payments and re-enter your payment information. So, you go to the website that looks just like the page you usually go to in order to make your payment and you follow the instructions given to you in the email. You hit the “submit” button and you feel good you were able to comply with the request made by the IRS in a timely manner.

But do you know what just really happened?

What just happened was you were phished. You were given a link in an email that looked like it was from the IRS, led to a page that looked like a legitimate IRS page, and you entered your financial information. A phishing email page looks legitimate, but it is not. These types of pages are “spoofed” pages more or less copied from the real page, but a close look at the address bar will show the address is not exactly what the address would be for the legitimate page. Unfortunately, that is something most people will not notice unless they are aware of the difference.

Email scams

Now let’s say you get an email from the IRS, asking you to reply to the email with your social security number or other important information. Because it is from the IRS, you definitely don’t want to ignore the request. You provide them with the information they have requested.

This is an email scam because the scammer created this legitimate looking email that was official looking, had logos, and everything else the IRS would include in an email.

The truth

The truth is the IRS is never going to request personal information over the Internet. They are not going to send you an email that takes you to a page for you to enter financial information. They are also not going to send you an email telling you they need your social security number. The Internet is a wide-open place and the IRS is not going to put your personal information at risk in such a way. If the IRS needs information from you, they will send you a letter to let you know what they need and how you can provide them with the information. The IRS always corresponds via postal mail. It is your responsibility to call them and provide them with information or mail them the information they need. All of this is done for the safety of your personal information.

If you are ever sent an email like this, you can visit phishing@irs.gov and report the email to the IRS. It is important the IRS knows when phishing or email scams pop up so they can work to get them shut down.

Purchasing your first home? There may be a tax credit available to you

You may have heard – under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home before December 1 can receive up to $8,000 (or $4,000 for married taxpayers filing separately). The credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000 or $150,000 for joint filers. Taxpayers are able to claim 10 percent of the purchase price of the home, up to $8,000 or $4,000 for married filing separately.

There have been many questions floating around about how to take the credit and whether it can be taken in 2008 or 2009. The simple answer is that it can be taken in either year, depending on how you claim it and what may benefit you the most.

According to the IRS, there are four possible filing options to consider:

File an extension – If you haven’t filed your 2008 taxes yet and know you are going to be buying a home before October 15, you can request a six month extension. This would be faster than waiting to file on the 2009 return. Even if you file an extension, you can file electronically and get your refund in as few as ten days.

File now, amend later – If you are due a nice sized refund for 2008 and you are considering buying a house in the next few months, you can go ahead and file April 15 and amend your return to claim the credit later this year.

Amend the 2008 tax return – If you are buying a house in the near future but have already filed your 2008 return, you can file an amended tax return to claim the credit and you will not have to wait until the 2009 return.

Claim the credit in 2009 rather than 2008 – For some of you, it may be more in your favor to wait and claim the credit in 2009. The credit could be higher for you in 2009 due to a job loss or drop in investment income. If either of these things could affect you in the future, it may benefit you to wait until the 2009 filing season.

For more information on tax credits for the first home buyer check this section on IRS’ website.

Tax Court finds widow qualifies for innocent spouse relief

Recently, the U.S. Tax Court heard the case of a widow whose husband had passed away and left her with deep financial problems she was unaware of during their marriage. At the time of his death, she found out he had not been paying their joint Federal income taxes or Federal employment taxes for his employees and they owed the IRS over $131,000.

At the time of the trial, the widow was 70 years old and had been unable to work for decades due to a disability. Her husband had always taken care of their financial issues and had all financial statements sent to his law practice, leaving her unaware of their worsening financial condition. He had prepared all of their tax returns and presented them to her to sign just before they had to be mailed off to meet the filing deadline each year.

The widow liquidated what assets she had and attempted to pay off the tax debt. She applied to the IRS for innocent spouse relief and was denied. When she took her case before the Tax Court, they reversed the IRS’ determination, supporting the position she knew nothing about the tax debt and therefore was not in a position to have paid it. She was already experiencing financial hardship and she in no way benefited from the taxes not being paid.

Unfortunately, this is a situation we have seen many times over the years, whether the spouse dies or the couple divorces. One spouse is left culpable for the other person’s errors or evasion. Situations like this are what innocent spouse relief was designed for.

One of our case specialists recently helped a client who had been through a divorce and faced joint tax debt, which she was unable to pay. The IRS was trying to hold our client jointly responsible for her ex-husband’s tax debt, which came from his law practice. She signed a joint return with her ex-husband and believed he would file the taxes accordingly. Her taxes were withdrawn correctly through her own employer and she felt she was wrongly charged with owing tax debt attributable to his business. Although the IRS denied our client’s initial request seeking injured spouse relief, we persevered and the IRS granted her equitable relief status.

Check the IRS.gov website to see if you qualify for innocent spouse relief using the innocent spouse tax relief eligibility explorer.

Buy a new car and get a tax credit?

Wouldn’t it be nice if you could purchase a brand spanking new car and be able to deduct it from your taxes? Well, now you can…sort of.

The IRS recently made the announcement that taxpayers who purchase a new vehicle (car, light truck, motor home or motorcycle) will be able to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns.

Of course there are certain stipulations which must be followed. The deduction is limited to taxes paid on purchases up to $49,500. That’s not to say you can’t purchase a vehicle that costs more than $49,500, but you will only get the deduction on the taxes up to that purchase price.

The vehicle must be purchased after Feb. 16, 2009 but before Jan. 1, 2010. Also, the deduction is phased out for taxpayers who have a modified adjusted gross income between $125,000 and $135,000 and file single and between $250,000 and $260,000 and file jointly.

Now here’s the really great thing. You don’t have to itemize on your tax return to receive this special deduction. It is available even if you use the standard deduction. And unlike the First-time Homebuyers Credit, the deduction cannot be used on your 2008 tax returns, only 2009.

Kind of makes you want to go out and look at some new cars, doesn’t it?